Balaji Srinivasan (2:30)

That's right. And I think I, as I remember I, I was. Because this is the first time I played it and I was thinking what if we wrote the state space matrix on a Whiteboard, which is either the really smart thing to do, a really dumb thing to do, and like, Gwern got annoyed at that or something, as I vaguely recall. Yeah, this is like many years ago. Yes, that's right.

Dan Wang (2:51)

Yes.

Balaji Srinivasan (2:53)

But I still think there's something to that. I have to go back and play that. And I feel like you might be able to. Maybe. Maybe it'd be bad to write it on the board and it takes away the mystique of it, but there's something to that, the elimination.

Dan Wang (3:02)

Anyway, I remember you doing that, and I think I was evil and I managed to deduce who was like, who the. Who. Who the Merlin was. Based on your. Based on your calculations.

Balaji Srinivasan (3:11)

Yeah, there's something. There's something about, like, there's an underlying data structure behind the thing, some kind of process elimination, you know, sort of like the Monty hall problem in stats where you actually write out the decision tree and then you can actually understand it better. At least I wanted to see what would happen anyway. Maybe it took some of the fun out of it, but it was fun for me at least, or maybe hopefully for you. Anyway, so. So we sort of traveled in some of the same circles and, you know, I. I liked your book, which we'll get into in a second, so break neck and we'll put it on screen. And I liked it because. So, you know, what's funny is maybe this conversation will be a little different than some of the other ones you've had, because it says a lot of things that I think are. That Americans should understand but are super obvious to anybody who's paying attention to Asia. In fact, I actually think you go easy on the U.S. i'm much more of a bear, perhaps on the U.S. than you are. Maybe you pull your. Pull some bunches in that or, or what have you, because I'm actually, I'm. I'm messaging. I'm talking to you right now from Singapore. And so let me see if I can. You know, obviously others have summarized the book, but essentially China's an engineering state. America's a lawyerly state. China actually is on the right in many ways because Xi is all about the great rejuvenation of the Chinese nation, even if he's kept the communist symbols. You know, he, you know, Mao went after the four olds and, and went after filial piety and so on and so forth, and g. Completely reversed that, where it's really a, you know, a nationalist conservative, you know, revival of 5,000 years of history and so on and so forth. And in many ways, when Doug Xiaoping took over in 1978, you know, a rebranding changes the logo, but not the guts. And Deng Xiaping did a reinterpretation where he kept the logo but changed the guts completely. It was basically, in my view, a coup, which, which is funny because now the Communist Party, nor Democrats nor Republicans admit the extreme discontinuity between Dung and Mao. Because like I, I know I'm butchering the pronunciation, but Hua Guafeng and the Gang of Four were supposed to be like the successors to, to Mao. And Deng managed to take over and shifted it towards the capitalist road, even after he'd been purged three times and a sudden being thrown through a window and you know, the famous, you know, black cat, white cat, doesn't matter if he catches mice. And the Zhao gang contract where those villagers, at least that was, that was the. There's the idea of it, maybe that was just a legend, but those there's villagers that had a contract to do capitalism, and they weren't actually executed unlike everybody else. And that was kind of like hell up a hand, Dung, shepping, helping, and said, okay, capitalism's leg regions, the special economic zones, and thus began Shenzhen and the things that were along the eastern seaboard. And that's how China modernized, didn't go to capitalism all at once. Right. So I may be getting some of that wrong, but was that roughly accurate? Kind of a quick capsule history? Go ahead.

Dan Wang (6:01)

Yeah. The only thing that I would quickly add is that I think Deng had a lot of the governing styles of Mao. He certainly purged a lot of people. He was really ruthless against some of his enemies. He got rid of several of his successors. And I think he was, in the words of one party historian, half Amal. And so I don't, I don't think he's no, no saint there. I mean, he was, he was as ruthless, I would say, even though his ends were much better for sure.

Balaji Srinivasan (6:26)

He started out as communist. Right. And he was in the, he was in the party for a long time. And actually somebody said that even the war in Vietnam, that which is the one war that was, you know, was that Deng held that. I had read this book, I see if I can find it, to distract the generals from, because he was, he was doing a lot of changing of the guard in, in Beijing at that time. So he just sent them all to go and fight Vietnam again so he could go and do some reforms or whatever in the capital. I don't know if you. Have you heard that yeah, it was.

Dan Wang (6:56)

To get the army support to give them a really fun war and then he will. And that he'll have their support forever.

Balaji Srinivasan (7:02)

Yeah, something like that. Right. So. And then, you know, that began through the tradition of. Or maybe I'm wrong about this, maybe that predated Dung, but there were like, there's like three posts that the head has which are, you know, the titular head of the state, the head of the party, and then also like the head of the military or something like that. Right?

Dan Wang (7:17)

Yes.

Balaji Srinivasan (7:17)

And Dung began the tradition of holding all three of those crowns to run China is if that's correct, if I'm not mistaken.

Dan Wang (7:23)

Or maybe state president, but he was, I'm not even sure he was head of the Communist Party, but he was head of the Central Military Commission.

Balaji Srinivasan (7:32)

Cmc. Right. Yeah. This is what, this is what. I'll get some of the details wrong, but there's like three things that he had and he was kind of running. It's like a, you know, uniting the triforce, so to speak. Okay, fine. So maybe we'll flash up what I, what I got wrong. Okay, so the reason I say that is here is what I will stipulate. Well, so I, I want to play your, your book back to you and you tell me if I got it wrong and then I want to actually debate with you what comes next.

Dan Wang (7:55)

Sure. Okay.

Balaji Srinivasan (7:56)

First, everybody should read Breakneck. Awesome book. And I think in many ways you sort of explain stuff because so many Americans are in cope mode, less so perhaps in 2025, but for the last 10 years they've had extreme cope where they've been pretending, you know, the Peter Zion kind of argument, that China is going to get old before it gets rich, it's going to fall into a ditch, it's actually weak and blah, blah, blah, blah, and that keeps not happening. And instead it's number one in cars and number one in solar and number one in all kinds of industries, especially the post Covid burst of energy into advanced manufacturing and so on. By 2025 seems to have really worked. And it's also number one in surface ships and it's signing all these trade deals. And down the list, all kinds of things seem to be working for China, whereas the US keeps struggling in many ways. I would you. I mean, one way of, I put it is your book is kind of explaining these sort of obvious things, or I'm not to be clear, I wouldn't say they're obvious to everybody, but it's like you're very gently kind of breaking Reality. Chiva, let me know your thoughts. Go, go.

Dan Wang (9:06)

Yeah, I think that all of those things are true. Everything is real. And I think. But there is more to this, a little bit more to the story, which is where I feel like you're doing a really good job of summarizing the business pages of the Wall Street Journal or whatever, Bloomberg. But I think we could also flip a few pages into the economics and the politics pages, in which I think the situation there does not look really good. That, you know, the concurrent with China's rise in EVs and solar, all of which is real. You know, there's also crazy politics. The Xi constantly purges its generals, purges his defense minister, purges his foreign minister. A lot of strange party politics that none of us really, I think, can understand outside of a few folks in Beijing. Economic growth has definitely weakened in some sort of property implosion is real. The youth unemployment is real. There's a lot of folks who have decided to leave China. I'm sure a lot of them are washing up at your doorstep in Singapore. A lot of amazing Chinese entrepreneurs who have thrown up their hands at the political environment in China. A lot of Chinese have decided to fly to Ecuador where they don't need a visa, and try to walk across to the American border. And so last year, customs and border patrol were apprehending something like 40,000 Chinese nationals every single month. And so that's a lot of people who want to take leave of the great rejuvenation of the Chinese ethnostate. Right. So, you know, I think that there, there are, you know, real economic issues. I think there's a lot of political uncertainty in addition to amazing technological growth. So, you know, we had to reconcile all of these.

Balaji Srinivasan (10:49)

So, you know, the Ecuador part, I've certainly heard those reports. That is the part that I don't fully understand because, you know, the other interpretation is China's just sending a bunch of people to go and embed in the US or what have you, you know, military age, males crossing the border, blah, blah, blah, blah. So, but, but the other piece of it, so let me discuss those other piece of it. So I'll give maybe, you know, obviously a lens. You probably considered Xi goes and purges Jack Ma because he doesn't want something like Elon to happen in China where the tech zillionaires of China get their own ideas and they control these giant networks and, you know, they can turn against the state. Right. We sort of see like two pads there with network versus state and state over network in. In my parlance, you know, and in some ways this is provocative, but in some ways China is the best for the most, and the Internet is the most for the best. Where if you're up to, let's say, the 90th percentile in China, you have clean streets and no crime and 247 delivery services. And at an upper middle class up to that level, you're fine. But once you start getting to the top, 1 or 2% of society now, you better watch carefully. You know, you're basically constantly surveilled to make sure that you're in line with the, with the party and what you could be hailed for a year or two ago. Suddenly you're on the outside of something and that's too sinuous a twist for a good chunk of people. So they head overseas to Singapore or Dubai or something like that. Would you say that's roughly right?

Dan Wang (12:32)

Yeah, I think the great contrast. I think you're exactly right in all of these. I think the great contrast, One of the great contrasts between the US And China is that America works really, really well for the rich. If you're a rich in America, you really don't have to suffer too many of the problems in, let's say, New York and California. You don't worry about the housing crisis. You have a giant home in Atherton. You don't worry about taking the New York subway to work every day, you know, which is like screechingly loud and dirty and doesn't work very well. You get to live in these skinny skyscrapers in Manhattan. I think that there's nowhere else in the world that's better to be enormously rich than in the United States.

Balaji Srinivasan (13:12)

I disagree with that now. And the reason I say that is, I think, I think that maybe was true. The reason I smiled is just like it's. I think that was true. And I think there's several bad parts about that. Now, the first is it's fine to be wealthy if other people are doing okay.

Dan Wang (13:30)

Yeah.

Balaji Srinivasan (13:31)

But a good chunk of American wealth is Keynesianism, which is really like, you know, how China's actually capitalist, but they call it communist. America is actually Keynesian, but they call it capitalist in the sense of the money printing is actually a gigantic redistribution of. It's basically, you know, inflation is taxation without legislation, if you've heard that one by Milton Friedman. So when they print trillions of dollars, it's like diluting down the currency for everybody. And they're doing that a lot, both. Both overtly and covertly. And then the plunge protection team. Have you heard that thing from Greenspan? The plunge protection team. Okay, that's a useful thing to, to look up. That is why one thing you mentioned in the book is like American stocks have done well and so on and so forth and Chinese stocks are flat. But part of that is because there's almost a social contract in the US which is the upper middle class and upper class have all these index funds, you know, stakes and index funds 401k. So they expect the stock market to go up and that's actually the metric, the number go up of the society. And so the plunge protection team at the Fed will actually print to make sure that in extreme circumstances stock market doesn't go down. Some of that was explicit like the, obviously the mortgage backed securities that were bought in 2008. Some of that is implicit where they'll spot Goldman or Morgan like the, you know, or for example the BTFP program that they just did where Treasuries weren't actually mark to market, they were valued on what they were bought for, not what they were sold for, just all kinds of manipulations. They do just keep the market nominally going up but in real terms versus gold or digital gold, it's going way down. Like for example if you just saw as of today, gold has actually outperformed S and P ever the last, you know. Right. So in my view the US is actually a fake economy. A key an economy. And actually, you know, actually you know, your thing on the engineering state versus the lawyers state. I think we could do a lot of iterations on that and I'll give you the ball in a second. But I've, I've so, I love your book so much, I want to say so much so, so, so jump in.

Dan Wang (15:31)

But yeah, I mean I can, I say I, I, I want to be, I want to tease you a little bit about this. Please sound like Xi Jinping man. This is, he has this term that the Communist party calls this the American economy, the fictitious economy and also the bubble economy. Not like a financial bubble, but just something that can pop very easily. And I think there is certainly something to this. I mean a lot of Americans would tell me Dan, what are you talking about? This country has no problems. Look at these giant trillion dollar corporations that we can create and the Chinese cannot and no one else can. And so again coming back to just to slightly put a close to this loop which is that I think the US works extremely well for the rich and I think it cannot stay a great power if it works only well for the rich. And you know, there is something strange about China where if you're an elite, let's say you're some sort of an elite in Beijing, you're working in tech. Who knows if your tech company would be smashed by Xi Jinping as he did a couple of years ago.

Balaji Srinivasan (16:26)

It's like the gaming companies got just.

Dan Wang (16:28)

Sent to 0 Online Tutoring, you know, they are really declared to be nonprofits. You know, let's say you're working in something like finance and then Xi announces a salary cap, as he did two years ago, of $300,000. And maybe you need to give your back. If you're within the party, military, state, elite, you never know when your patron might be taken down by some sort of an anti corruption purge and then your entire network will fall. And so there's something really precarious about being rich and powerful in China in which in the US if you're rich, you can more or less transmute a lot of your wealth into political influence. Now maybe that's bad, but it's much easier to be rich here. But I fully agree with you that there is something very strange and fictitious about the American economy. The contrast that I like to set up is, let's think about Apple. Something like $3.5 trillion market value now spent 10 years debating whether it could produce an electric vehicle. And after.

Balaji Srinivasan (17:23)

Yeah, and Xiaomi does it.

Dan Wang (17:26)

And what is Xiaomi's market value? Something like $200 billion last I checked. So the Apple is worth Something like 15, nearly 20 times more than Xiaomi. And what would you rather have a company that is able to build cars within four years of announc as Xiaomi did and for these cars to go win major racetracks in Nurburgring and in western Germany or to be kind of Apple and just not, you know, debate this for a while and then give up. Now I think I would rather take Xiaomi and I think this is less an indictment of Apple than an indictment of the financial system in the US which assigns these crazy valuations to highly profitable companies. But these mostly software companies.

Balaji Srinivasan (18:10)

Yeah, so Apple is a hardware coming also. But yes, your point is correct. So my view on this is looking ahead to 2035, 2040, maybe even 2030. You know, I've written about this, but to briefly summarize, I think I wouldn't even, I don't even think of it as the United States. I think of it as the disunited states because like for example, there's no Korea, there's Only North Korea and South Korea. Right. Like it's not. Actually you can't talk about Korea and Korea's position on this and Korea because North Korea and South Korea literally have different foreign policies. They're opposed to each other, they have different mores, they both might write in Hangul, but they're saying totally different things. They, different vocabularies, you know, premises, all that kind of stuff. Right. So there's no, for the most part.

Dan Wang (18:54)

Only one Korea matters to us. You know, only one Korea is in the global economy producing any memory chips. Right?

Balaji Srinivasan (18:59)

That's right. South Korea, exactly right. But North Korea obviously is pointing missiles and so on and so forth, but yes, correct. So we can't talk about Korea. We have to talk about South Korea and North Korea in the same way. I don't think we can talk about America. We can talk about Blue America, Red America and actually tech America. And those are like three separate groups. And whatever you would hear a defense of America, it's almost always coming from tech America talking about the trillion dollar companies or sometimes Red America talking about, well, we can still re industrialize and we still have the 1945 Spirit and so on and so forth. And blue America is sort of not really, you know, that animated in terms of its defense of democracy and so on and so forth nowadays, but they were a few years ago. And my view, at least maybe you'll disagree, is like tech America is actually the Internet and it overlaps with European tech and Indian tech and especially crypto, which is which I know you don't love crypto or you're probably skeptical about crypto. Yes, but the way I think, you know how like when Rome fell, what survived was Christianity.

Dan Wang (20:09)

Interesting.

Balaji Srinivasan (20:10)

In my view, like, like America is going to go to zero and what will survive is the Internet. And the bad version of the American legal system is the one you mentioned, which is obstructing and constricting and so on and so forth, and it's being abused by all these lawyers and so on and so forth. But the good version is the Internet legal system, which is a predictable order and it's rule of code as opposed to rule of law. And it protects property rights and has the best monetary policy in the world and has smart contracts and so on. And even if Americans and Chinese can't trust each other's legal systems, actually lots of Chinese people do appreciate Bitcoin and BTC is actually the genuine balance to CCP as opposed to usa, which is going to zero. Let me pause there. As politics can say about that.

Dan Wang (20:57)

That's a crazy idea, man. That was. BTC is going to be the alternative against CCP when USA goes to zero. I think that's a great phrase. You should tweet that. If haven't yet.

Balaji Srinivasan (21:07)

I. I have tweeted that I have to. That's actually the. So to just to explain. It's more than just a meme. It's like a compact phrase, but right. Like in the 20th century, the contestation was symmetrical between Eurasian Communism and Anglospheric capitalism. It was like tank for tank, plane for plane, USA versus ussr, you know, and so and so forth. But I think in the 21st century, it's asymmetric. It's between China and the Internet. China is like Apple, vertically integrated with a nation. You know, the Han Chinese language culture, thousands of years of culture, the party state and then of course the network, which is the firewall and the apps and all the Chinese tech companies that's vertically integrated. And something like 97% of people of Han Chinese descent are in this sort of vertically integrated, very functional Voltron, this meta organism that coordinates all these people in this really, really powerful way. And the other summing 7 billion people are going to initially, and perhaps for a long time be the weaker of the two sides. And that'll be the Internet, which is messy, Android chaotic, but also more free. And that's how I think things square up after the fall of the dollar.

Dan Wang (22:16)

Balaji, I think this conversation is going to be amazing when it's published. I hope everybody watches this on video because you'll see me smiling this entire time because I love your catchphrases, I love these tweets. I'm still hung up by this idea of BT being the alternative against USA and ccp. But then let me rephrase this, which is that, oh well, it seems like USA and CCP must both hate btc. And so because it is representing the alternative order. What if they crush btc? I don't know if BTC is powerful enough.

Balaji Srinivasan (22:48)

Oh, that's the question. So basically the way I put it in the network state is actually I say ccp, nyt, btc, the party, the paper and the protocol are sort of like a rock, paper, scissors kind of thing. And when I wrote it, NYT still hadn't been defeated, but with Elon X has basically defeated nyt, I think NYT has lost its hegemony and so and so forth. So it's sort of like, you know, in the, in the mid 20th century, there was communism, fascism and, and democratic Capitalism. And two of them teamed up on the third and then the other two fought amongst themselves. And so, so, so I feel NYT is just being knocked out of the box as a shadow of what it was. I don't think it's going to be coming back. And because it depended on being ideologically hegemonic. So CCB versus btc. You're right, that there's like. That is a genuine polarity. Because, you know, for example, in the early 20th century, the swing vote in Germany was like the German worker. Like the Soviets would appeal to them as a worker and the Nazis would appeal to them as a German. So one was appealing on the basis of like class and they're appealing on the base of race. Right. And that was like the swing vote with this last election, somebody like the black American or female American or gay American, the Wokes would appeal to them as black or female or gay, and the maggots would appeal to them as American. Right? That was like the swing vote right in the center. Okay. And I think in the dispensation that is to come, the swing vote will actually be the Chinese technologists, because the Chinese will appeal on the basis of China will appeal on the basis of race, and the Internet will appeal on the basis of class. Right. So that's often a kind of thing, like, you see I'm saying, right, like sometimes it's the left that appeals on the basis of. In the case of the Wokes, they'd appeal on the base of race or genetics. And the mag is actually were appealing on the base of class in the sense of membership in the American class, you know, which is like a software thing, whereas race is like a hardware thing. You know, Let me pause there.

Dan Wang (24:41)

Yeah, maybe. I mean, I wonder. I mean, first I would wonder about your idea that Elon has defeated mit. I think Elon has certainly defeated someone and that someone is himself. And I think Elon has been extremely adept at defeating himself. I mean, he got himself out of being co president. How's Tesla doing? I don't know. It doesn't look great. How's X doing? I'm not sure. I think MIT's winning this round. NYT.

Balaji Srinivasan (25:05)

But you think so? It's interesting. Go, go.

Dan Wang (25:08)

Yeah, I mean, I think like, you know, I don't know, I'm almost mostly off X at this point, but I'm reading more nyt, so maybe I'm not the target audience. Maybe I'm defeating myself. But I would also say that I think the only force that is more powerful than the usa. The only force capable of defeating the USA is the usa. And the only force capable of defeating China is the ccp. And I see that both of these nation states have become extremely powerful at beating the shit out of themselves. And I think these humiliating self beatings will continue until morale improves. But I think that Biden did a terrible job. Trump is doing is being kind of apocalyptic and I think they have a good chance of unraveling the United States. Yes. And I think the Chinese have been driving a lot of its smartest people, a lot of its most entrepreneurial people, a lot of its best creatives out of the country. And I think the CCP will also defeat the Chinese ethnostate. They'll defeat the Great Rejuvenation. So that's my model. I'll pause there. What do you think?

Balaji Srinivasan (26:12)

Okay, so what I think is, I think Xi is a lot like FDR in the 30s where he was the least bad in the sense of like there's lots of things. I mean, FDR interned the Japanese. FDR basically did the gold seizures. You know, FDR essentially pushed. I mean, he used the government against all of his enemies. He went after Andrew Mellon, he pushed the great fortunes into foundations. People credibly alleged that he, you know, pushed the Japanese into World War II and so on and so forth. All kinds of stuff have. He ran for four terms which broke all previous norms, storms, blah, blah, blah. All kinds of stuff FDR did. Right. People think he made the Great Depression great, he prolonged it. But net, net. When all the dust settled, ultimately the US was in the strongest relative position and it screwed up the least.

Dan Wang (27:01)

Yes.

Balaji Srinivasan (27:02)

Not that it didn't screw up. Go ahead.

Dan Wang (27:03)

Yes, go ahead.

Balaji Srinivasan (27:04)

Right. It screwed up the least out of the Soviet Union, which has gotten killed, Nazi Germany, which has gotten itself blown up. The Japanese got nuked. The US both, both through competence and through luck or whatever, screwed up the least out of them and was therefore the most powerful in that dispensation. I think China's big instinct because the century of humiliation, you know, how like a great founder will take a lower valuation but always preserve control. Right. My view, and you can probably fill in the gaps on this, is especially also seeing what happened to Japan with the Plaza accords in the 80s. Right. Lots of people, our friends will say something like, oh, you know, people were saying Japan was going to beat us in the 80s and therefore it'll happen exactly like that and we're going to beat China the same way. But Japan didn't just lose it was basically killed because it's, it's like a U S occupied country, right? There's a military base there, you know, thousands, tens of thousands of troops. Japan's constitution is written by the US and most importantly, Japan's not a sovereign. One way of putting that in 2017 actually NYT released an article that said in 2010 China had killed a bunch of American spies in, in China.

Dan Wang (28:14)

Right.

Balaji Srinivasan (28:15)

Japan could never do that. That means China has deliberations that America can't see in a way Japan couldn't. And so Japan, with the Plaza Accords, it was handicapped, it was forced to buy U S Treasuries. Its whole decade of stagnations, you know, began at that point. And China's hyper conscious of not going through that. So China at all, at all stages, it took less money to preserve more sovereignty. It took worse terms in some ways to preserve. Right. So because of that instinct, that wall building, you know, for example, it took all these hits when it banned foreign social media and it built its own, right, all these PR hits constantly. And it was willing to do that to preserve sovereignty. I think that's going to end up being the far sighted decision, for better or worse in this century. For example, you see what happened with Ukraine where they're scripting drones on Russian soil?

Dan Wang (29:01)

No. What does that mean?

Balaji Srinivasan (29:03)

So like a few months ago the Ukrainians managed to like have some exploding drones activate within Russia and go blow things up. Right? So they could, they could control things remotely. Right. So in my view that means, and I talked about this actually 12 years ago, but now it's actually becoming real. Digital borders and physical borders are like the same thing, Right. Your fire, the great firewall will be seen in some ways as a very far sighted thing because it is digital hard borders. People won't be able to script drones on Chinese soil, they won't be able to script humanoids on Chinese soil. They won't be able to also send in destabilized memes, disabling memes into Chinese soil.

Dan Wang (29:43)

Right.

Balaji Srinivasan (29:44)

Whereas the unmoderated Anglospheric Internet will just be filled with all of these scissor statements and crazy things that are all driving everybody crazy, as we're seeing.

Dan Wang (29:57)

Yes.

Balaji Srinivasan (29:58)

And so China's also insulated against that because people only speak Chinese. So and she's taking English out of the schools. So they've got like multiple levels of firewall and they can just like sip green tea and everybody is shooting each other. You know, in other countries as the.

Dan Wang (30:11)

Dollar goes away, like that is A reasonably compelling idea. I think that I have a solution for this, but.

Balaji Srinivasan (30:20)

But go ahead. Go. Yeah, go.

Dan Wang (30:22)

I feel like the Chinese are. They've really taken Napoleon's maxim to heart that the game goes to he who does not lose. Now, obviously Napoleon, the do nothing win meme. Napoleon won like nearly all his battles, but he just lost Waterloo and a couple of others. Right. And then he lost and he lost. He lost badly. Right. And so I think the Chinese are very intent on not losing. And there is certainly some good things that I see that the Chinese are doing. I mean, I agree that the Great Firewall in retrospect looks like a good decision. You take a lot of PR heads. But as I wrote in one of my letters, it becomes really difficult to say that the Chinese really wanted the Internet in the late 2010s when Congress was regularly dragging Zuckerberg and Twitter and everyone else into Congress to say, your products suck. You're destroying us. You're killing us, man. And so I think you can't tell the Chinese you really need these products in your state. And I think that makes a lot of good sense. I take a look at what is going on with AI today. Last week we have SORA too, and we are able to produce hyper realistic slop that friends have told me that their family members were not able to distinguish that this was an AI generated cameo. And I think that's kind of incredible. Why are we so focused on releasing this stuff? And this seems like crazy decisions being taken by the AI labs without any real consideration for how the people might actually use it. And so there is a sense in which I think that China just wants to be totally stable and then close the doors on the Celestial Empire and then let the barbarians tear each other apart and eat some mochi balls and then drink green tea. Yeah, I mean, that sounds good, but I think that there is a problem here, which is that the only force capable of hurting China is the ccp, which, I mean, in my book I write about how zero Covid had zero Covid and they had the one child policy in which they were really dumb and they were really autistic about thinking in such literal minded terms. Oh, there's going to be ecological doom if we have overpopulation. The solution is one child per couple and then conduct 300 million abortions over this period. Or, oh, we don't care about people who need chemotherapy or need dialysis treatment. The only thing that we care about is preventing the spread of the COVID virus. And so we are going to you know, prevent the spread of the virus at all costs. And so, you know, here is where I think the engineers with their literal mindedness will not be able to leave the people alone. I think the best case scenario for China is if the CCP decides to spend all day sipping green tea and then just leave the people alone. And I don't think they're going to do that. I think they're going to figure out new and novel ways to destroy the country themselves. What do you think?

Balaji Srinivasan (33:18)

So it's interesting because I, I want to make the case for China and then I'll make the case against China. Right? But that's to say, let's say there's like V1, V2, V3, V4 of an argument. You know what I mean? I think maybe you and I are on V4, but let me, let me, let me do the V1, V2, just get to our progression, right? Because you go to unsusphiscated arguments, you get a sophisticated one, right? Okay. So the V1 is kind of the naive, like that's a Chinese Communist Party. They're, you know, and people think they're all Maoists and it's slave labor and so on and so forth. That's also, that's a. Or that there's still the ideological mouse. They've got a very outdated view of what China is. They see the Chinese cities and their response is, oh my God, there's leds on the cities. They don't realize the point is the cities didn't exist 30 years ago. Right. And they're actually very clean and, and beautiful or whatever. Then the V2 is, I'm not attacking him, but let's say somebody like Arnaud Bertrand on X. Right. Or Carl Z, which is basically, you know, I welcome our new Chinese overlord. Someone, someone who will say something like that, right? And it's like their case is something like America blowing up the Middle East. China's been building up Africa. America just has a bailout economy for the wealthy. China has shared prosperity for everybody. China hasn't started any wars. America's starting all these wars. China's internally united. America is totally divided. And actually also with these tariffs, China's been doing trade deal after trade deal. And by the way, that also is why I think Xiaomi or, you know, BYD dji, their market caps will probably rise because Chinese market, Chinese market access has expanded as a function of all these trade deals that, you know, Xi has recently inked as a function of the reverse thing on the tariffs. Okay, then the V3. So that is like the first is, you know, USA is still 1945, it's going to win. China sucks. The second is actually China's super strong and it's good, everything will be fine. The V3 argument is basically the US was on balance better than the Soviet Union from 45 to 91. But then after it won it became by degrees worse and worse and worse, behaved and started bombing people and abusing its power and so on. And one way I think about it is at home China is a one party state, but abroad it's a two party state because it's checked by America. Conversely, America at home is a two party state with Democrat, Republican, but abroad was a one party state where it blow up everybody because it wasn't checked. It's an interesting way of thinking about the last 30 years or so, right. And now America's coming home because you know, it's the national defense strategy, if it's real says pulling troops back from Asia like it's becoming a country, not an empire. It's giving up the imperial burden like the end of the Soviet Union. And so the bad part, the V3 is China will expand in such a way that it actually has unchecked power. And even for example, zero Covid would never have actually been undone in China without the signal from other countries because the Chinese diaspora knew that zero Covid wasn't working elsewhere because other countries were, you know, that that external signal was certainly filtering into China in some ways and people were aware that Chinese people didn't have to live like this. And that was part of the signal. I think another part of it is Xi just wanted to win his re election in 2022. And zero coveted was sort of a way to winkle out anybody who wasn't super loyal to him. And then right after, you know, I think the November 2022 Congress, then they un unlocked everything. So it wasn't really about zero covet is about third term or fourth term, whatever, you know, and the term. And so then the V4 would basically say, okay, the USA is going to zero. It's, it's not 36 trillion debt, it's 175 trillion debt. The dollar is being devalued against gold, it's dropped by a hundred million x against bitcoin, it's pulling back its troops, people are shooting each other domestically, it's telling NATO to go fight for itself. It's, it's basically sanctioning itself on trade, essentially withdrawing itself from world affairs. It's like you know, have you seen a steel cage match?

Dan Wang (37:19)

Yeah.

Balaji Srinivasan (37:20)

Yeah. So imagine I imagine like a new iron curtain, like a steel cage UFC octagon thing descending over America. And all talent is told go home. All the researchers are told to go home. All the wealth is getting going to either the Internet where It's S&P7 or the digital asset treasury companies. S&P493 is flat. US treasuries are down to zero. And conversely, all the manufacturing and military is in China because of the robots and drones there. And all the media and money is on the Internet. And now North America is just this gigantic steel cage match with all the shouting and all the shooting and it's like basically what the Eurasian continent was under communism. Unfortunately in the 20th century, all kinds of crazy people shooting each other, warlord era collapsed, the Soviet Union, Tajikistani civil war, all that kind of stuff. I think it's coming to North America. So in the V4 is basically okay in that world. Something needs to balance the Chinese drone armada because Chinese will be insanely, insanely, insanely, insanely, insanely powerful. It'll be like 5 or 10x America at its peak. It will be because it's, it's actually hitting more steam. Chinese overproduction just means like so many widgets popping out of, you know, the ground there. They, they're still gaining steam, right? Like the country still hasn't been fully developed. And so China will just be the most powerful physical force to have ever existed. And right now, many Americans aren't mentally living in that world because they still think like the US military exists. Right? But the US military is being unfortunately beaten by the Houthis. NATO is being beaten by Russia. If NATO can be beaten by Russia to the point that there's peace treaty talks with Putin, China is like 10x Russia easily. You know, Hexetha said Chinese hypersonics can sink all U.S. aircraft carriers. Right. The Secretary of the Navy said one Chinese shipyard makes more ships in the whole U.S. navy combined. Right. Raytheon Co has said you can't decouple from China. So what can possibly balance the Chinese drone armada? I think the entire American mentality of like fighting with your fists and so on and so forth is very romantic, 20th century thing that can't be done against China. So you actually need something totally different, which is Gandhian nonviolence, decentralization, agility, invisibility, something totally, totally different against this enormous force. So that's where I'm at with V4. Let me pause there because that was a lot, but get your thoughts.

Dan Wang (39:34)

Yeah, I think my problem is that I'm on V73 and it has a remarkable convergence with V1. And I think I've kind of horseshoed my way back into the start of this Snakes and Ladders. Sure. I think you're right that there is kind of this negative element with both of them. And this is where I, I would, you know, think about how you say that MAGA was appealing to the gays as Americans rather than as gays. I, I think there is something to that. But there is also, you know, MAGA is also very interested in defining who the internal enemies are. And probably they're throwing. They would like to throw more of the gays in jail.

Balaji Srinivasan (40:16)

And in 2025. Yes, in 2024, maybe it was, it was a very different message up until the election and then shifted 34. Yeah, go ahead.

Dan Wang (40:25)

Well, I mean, when you hear these terms like heritage Americans first, I think of like, when you say heritage American, I think of like a giant Thanksgiving dinner that's with a big turkey in the middle. And you know, I think that it's just these very strange sort of terms. I agree that there is kind of this iron curtain that the Americans are self imposing on themselves and that feels really strange. And maybe it's good for the troops to withdraw from the rest of the world and give up the imperial burden, but I think it's not good to deport a lot of South Korean engineers, or let's just call them Korean engineers.

Balaji Srinivasan (41:00)

Who are trying to build their heritage of Maryland.

Dan Wang (41:03)

That's right. And humiliate them in chains. That is totally a horrible own goal. I'm just always very conscious of the ability for the Chinese to impose own goals for themselves as well as, you know, it would be great if they spent all day sipping green tea, but they can't leave anything alone and they just constantly have to meddle in everything. Is America Keynesian? Yeah, sure, maybe. But the Chinese are, according to Adam Tooze, just so much more Keynesian. They Keynes everything. Right. And I think that there is kind of just this endless meddling mentality. And let me just make a broader point, which is that I think the US and China are in competition. And rather than one country having all of the structural advantages on its side, I think I wouldn't agree with that characterization. I think that the US can very credibly point to these amazing strengths that the US has. I think China can also point to these amazing strengths, namely these drone armadas, which are very powerful, but there's Also, if you wanted to focus on the most ugly parts of America, you can definitely paint a horrible picture dressed as the same with how you can do that with China. And so my mental model for all of this is that this is a long term competition. There will be no country that completely implodes and fails to get up, up, get back up in the way that Gorbachev did really kind of drive the Soviet Union.

Balaji Srinivasan (42:22)

Okay, so that's, that's a big difference of opinion because finish your saying and I'll say something. Go.

Dan Wang (42:27)

I think that, you know, when one country is ahead, it is going to get overconfident and make a lot of mistakes. Because I felt like I lived through this in China when at the end of 2020, at the start of 2021, Xi Jinping felt like he was at the top of the world. He was able to control Covid, in which, you know, the US was not. January 6th just happened and China looked like it was like a super stable, economically prosperous place. What does he decide to do? Smash a lot of tech companies, destroy the real estate sector, and then also hold on too tightly to Covid? I think that is a classic mistake.

Balaji Srinivasan (43:01)

Of overconfidence and arguably was it, because. Let's analyze it now from 2025.

Dan Wang (43:06)

Okay, key, go ahead.

Balaji Srinivasan (43:08)

The three red lines essentially were sort of a controlled demolition of the real estate bubble. It didn't actually fully crash the economy. He went after the video games, he went after, after school tutoring, which there was a red queen phenomenon after school. He definitely hit all kinds of people on, you know, you know, entrepreneurs and so on. But advanced manufacturing, the transition into it did work. I know you mentioned the little pinks in your book say this, but maybe they're actually right because he avoided the fire economy, you know, finance, insurance, real estate of the US he avoided going too far into it. It popped. It doesn't seem to have it caused some damage. I mean, one way of thinking about it, if the country, you know, rather than talking about it in a very ideological terms, if the country is like the platform and the companies are like the apps on that platform. Right. Sometimes Zuck will make like a breaking change to the Facebook APIs and Break Zynga, for example, if you remember when they did that. Right. Because it was spamming the feed too much. Nothing, nothing against Zynga or whatever. You're just making that decision. The greatest good for the greatest number, like Zynga is working in its own way. But long term, this is spamming too many people with zombies or whatever it is. So actually no, we don't want to have Zynga. We're going to push Zynga into its own archived inbox, like a spam inbox, and so on and so forth. And so in the same way, if he's like got, he's got root over the Chinese platform, he's like, actually we don't want these apps, we don't want any more of them. We want the advanced manufacturing stuff, which seems to have worked.

Dan Wang (44:38)

Yeah, I mean if, if the only thing that matters to your economy is advanced manufacturing and I am going to let no one talk me down from my st, that manufacturing is almost everything. And so I think that manufacturing is really important. But you know, he didn't only hurt a lot of the video games and maybe, yeah, you should control the video games, you should control the social media, you should control the short form video apps, you should control the AI slop. Frankly, the Americans ought to do more on all of these different things. He also smacked around people like Jack Ma, people like John King, real guys and other people. Right. And so that's pretty important too. And so this is where I think that it is still important to flip a few more pages past the business pages of the Wall Street Journal into the economics pages because youth unemployment is real. Tamping is real. You talk about inflation being. What's the Friedman line? Inflation is a taxation.

Balaji Srinivasan (45:27)

Inflation is taxation without legislation, without legislation.

Dan Wang (45:30)

And I think, yeah, inflation is bad, but the only thing that might be worse than inflation is deflation, which the Chinese are not quite able to get out of. And Xi is kind of this boomer who says why do people dislike like deflation? Don't people like lower prices? Well, not if you're an investor.

Balaji Srinivasan (45:45)

Well, so here's where, here's what I want to argue with you. Go go saying I'll.

Dan Wang (45:48)

All right, let me, let me just make one more point which is that I think that, you know, the country that's going to be ahead is going to make all sorts of mistakes driven by overconfidence in HUIs, which is what I think for the most part she did. I think that the controlled demolition of the property sector destroyed a lot of confidence in housing and construction activity is still not back and we're, we still might like get some sort of a weird financial crisis because supposedly controlled demolition of the, of the property sector. I think that this was not as controlled as we'd like to believe. And arguably you can say that the United States grew overconfident, which is how it imposed this octagon upon itself to make it, to make people destroy each other. That's a mistake of overconfidence. But the more that you're ahead, the more you'll make these sort of mistakes. The more that you're behind, the more that you're interested in patching up your deficiencies. Which is why I think this is going to be kind of a neck and neck race for a very long time. Because we can't just look at it race based on structural advantages. As it goes on, you know, people will trip up and stumble and fight harder.

Balaji Srinivasan (46:51)

Okay, so here is my worldview and where I disagree with you on is basically a few things. First is I don't know if the US has that much longer to live as like a coherent political entity. I think we're on the verge of a end of USSR type scenario. Dalio describes it as a debt heart attack. Elon thinks the government isn't going to last very long. You're seeing gold flipping US Treasuries, for example, if you saw that graph, Gold is flipping US Treasuries as reserve asset of states. And certainly bitcoin has risen more than a hundred million X against it. There is, you know, the US has not become the like. The US used to be the number one destination for global millionaires up to 2019, plus 10,000 millionaires. After 2020 it dropped 85%. It hasn't recovered. And global millionaires capital has relocated to Dubai and Singapore number one. And number two, they've left China as well, a good chunk of those millionaires. But China regenerates them so fast in a, you know, that, that it's actually, it's, it's basically seemingly fine for them. And China's view I think is that the new up and coming generation of 20 somethings is. Speaks purely CHINESE they have purely Chinese apps. They'll be Chinese nationalists. And unlike the 40 somethings that have some sympathy for the west, you know, a lot of these Gen X or older millennial entrepreneurs, he's like, you know what, why don't you guys go and it's fine. Jack Ma can be a teacher in Japan or something like that. What he's, you know, doing and somebody else in China can run that. We've got a billion Chinese people here, right? That's essentially Xi's bet that he can do without these sort of older Chinese entrepreneurs. And now he just wants those, the younger ones who have grown up on Zhin Ping Dot and all the Chinese apps and think China's number one And Luckin is better than Starbucks. And maybe they're right. BYD is outselling Tesla in neutral markets. Xiaomi was able to ship a car when Apple wasn't. TikTok needed total state intervention and the combined efforts of Google and Facebook and, and so on and so forth couldn't beat TikTok. And DJI is the cheapest and largest scale drone manufacturer in the world. And in an end, you know, like essentially the US can't compete with China abroad with the exception of maybe Elon, and even Elon is having a tough time in any neutral market. Chinese products win. And so the US has retreated to just trying to tariff and build tariff barriers around the US which is going to fail in the medium to long run because the Democrats may defect from that. Like Newsom has said, hey, maybe he'll import goods from China if he saw that right. Like that's why I say America. It's not the United States, it's just United States. Blue America has its own foreign policy distinct from red. America and Newsom and Walls and Hillary Clinton have all signaled that they may want to align more with China than, than the Republicans do. Like, you know, you saw the thing with Newsom and how he, it wasn't just that they cleaned up San Francisco for Xi, it was that Newsom was the only Democrat to get the meeting with Xi. Do you remember that?

Dan Wang (49:47)

Yeah.

Balaji Srinivasan (49:48)

My view on that is again, a lot of Americans don't know this, but like within China, you, you can't just jump straight to the presidency like Obama or, or Trump. You have to go from like, you know, mayor of a village and then governor of a province and all the way up and you make it to Central Committee. And so Xi recognized Newsom as having a similar path going from San Francisco mayor to California governor to possibly president. So recognize him as a credible, possible person. And when Newsom was in China, he said he wants to be China's long term stable and strong partner. My view is that after the dollar ends, that's the last strand that's holding blue and red together because blues. Only 4% of Democrats marry Republicans. Democrats certainly don't vote for Republicans. Democrats don't even talk to Republicans anymore. They're in their own blue sky versus X, you know, kind of thing. Digital secession's already here. They're now starting to shoot each other, blow each other up. There's a new killing, crazy, blowing up thing on X every single day nowadays, unfortunately. And so last piece of paper that's holding this thing together, it's not you know how people say it's not a. It's a country, not an economic zone? You've seen that kind of post on X. Yeah, it's actually an economic zone, not a country, because the only thing holding it together is this piece of paper called the dollar. And when that tears, unfortunately, there's nothing keeping blue and red together. And Democrats will side with Xi if they don't have D.C. yeah, well, I don't know.

Dan Wang (51:13)

I mean, why would she want to meet Governor Newsom? This is a guy who looks exactly like the lead actor in American Psycho. If this seems kind of dangerous, me, that's just weird. And I think there is someone who is more willing to give a bear hug to Xi Jinping than Governor Newsom, and that is President Donald Trump. I mean, I was digging up these quotes for an article I was writing in which Trump told the Wall Street Journal, xi is so smart, brilliant, everything nearly perfect. There's no one in Hollywood like this guy. As if, like, Xi Jinping had, like, Tom Cruise levels of handsomeness, which I. I find, Wendy.

Balaji Srinivasan (51:50)

But. But Trump is unpredictable because he'll say that about someone, then he'll insult them, then he'll come back it.

Dan Wang (51:55)

Well, right now he's trying to bear hug Xi Jinping. And so, you know. And so, you know, I think you're right. I mean, maybe there is more than one thing that unites Democrats and Republicans. That's the paper. Rather, it's like a love of Xi Jinping. What do you think about that?

Balaji Srinivasan (52:08)

Well, what's interesting is a few years ago, people were saying the one bipartisan issue was being anti China. Right. My view is Democrats were only anti China because there was a contestation for who would run the most powerful states. State like, basically, first China disrupted manufacturing, so disrupted Red America. Then post 2020, it seemed to become the most powerful state. So then blue America really fought it. And now recently, finally, Tech America, which always had a sense of superiority versus China, has finally started to see, wait, Chinese AI models are actually giving us a run for the money. Chinese robotics are actually really good. And for the first time, Tech America is actually taking China seriously. Not just one off like TikTok, but actually, whoa. Actually, the Chinese engineers aren't just copycats, they're actually innovators and so on. That's. That's always being the thing which tech is, you know, American tech has felt they've had the edge, and now that edge is maybe slipping. So I think, though at almost a genetic level, I think red Americans at the base not Trump have a more visceral aversion to China, whereas Democrats, it's funny to put it this way, this is a one liner, okay? But Democrats and the, and China are both natural communists, so they'll be, that's, that's a joke. Okay. But there's, you know, they're statists, right. They're, they're Democrats are willing to be administrators in a multi ethnic empire. And so they could find something under the G dispensation. Sort of like, you know how Venezuela is like this dysfunctional kleptocracy, but it's sort of bailed out with Chinese goods. China's willing to, as you know, it's willing to work with, you know, Iranian fundamentalists and Singaporean meritocrats and Venezuelan kleptocrats and Russian Orthodox, so long as they don't interfere in China's internal affairs. Right. And so I think they will support the Democrats and just ship them goods and support them in this way as the, have you seen this thing on soft secession that the blues are doing? Right, right. So in that soft secession they just get goods from the west coast ports from China, they don't enforce the tariffs. I think it's very likely something like that happens. Newsom has talked about, I'm not even, you know, inferring this. Go ahead.

Dan Wang (54:17)

I don't know. Biden, Democrats, this guy from Delaware, another potential port town, there's a port of Philadelphia, didn't get a lot of, didn't do a lot of good for Joseph Biden when he was president.

Balaji Srinivasan (54:29)

And, but, but, but Biden, Biden is 19, born 1942 and Trump's born 1946 or something like that. So they're actually both, if you zoo out, they're both like, you know, coarse handsy guys from the northeastern U.S. born at the time of like peak America, who grew up thinking the USA is number one on everything effortlessly. And Biden would say things like we're the United States of America for Pete's sake. Like essentially they just think USA number one. Go ahead.

Dan Wang (54:55)

Yeah, I mean, I think, I mean, look, you're focused on a lot of weird happening in America and no doubt the weird shit is real. But I am living, I'm speaking to you from San Francisco. I look out the window and I see three weird pieces of shit a day before breakfast. That's just how odd things are. But if I am trying to think a little bit about China, as I looked at, there's plenty of dissatisfaction. I don't know if they're regenerating all the millionaires very quickly. There's a lot of this. The biggest driver of wealth in China is the property sector. When you have a property sector collapse of 25% and then people aren't really buying home, it's really hard to build more wealth after that. There's a lot of uncertainties about the corporate sector. There's a lot of young people who've decided to move to northern Thailand where they could smoke drugs that are legal in the state of California, and they're taking leave of, you know, the great rejuvenation of the Chinese ethnostate that's being undertaken in their name. And all of these millionaires are leaving. And there are. I mean, I don't think the. Definitely the demographics is not an issue in the next 20 years, but in like 25, 30 years from now, demographics will yawn larger and larger. It seems like not going to be able to escape this hole very well. Understand, they're deploying a lot of robots, but what if the Silicon Valley bed is real, which I don't really buy, but let's say we invent God in a Box, we get the superintelligence and they invent all these humanoid robots, and then we get to take control of these humanoid robots because we have the AI and they don't. That could be bad. Maybe finally all of this AI slop, we should just consume all of the Sora 2 videos just to support Gave Obi Nai a hand so that they can take charge of the robots later. And, you know, the politburo seems pretty dysfunctional. Xi Jinping, you know, I know, I get he's like more handsome than Tom Cruise, but he has a belly. I get.

Balaji Srinivasan (56:47)

I don't know.

Dan Wang (56:49)

I said that, you know, he's smoking probably too much because, you know, Xi was born in like 1952 and all of these people smoke way too much. If he falls over one day, are we going to get tanks in the streets in Beijing? I don't think so. I think they'll have an orderly transition. But what are we really going to do? Get. And so I think there are all of these disunited politburo comments that we can also have as soon as this guy keels over. And so I don't know, it's like, I think that the tariffs will be enforced. It's more likely for the tariffs to be enforced on California than for the Chinese somehow to figure out all of their own political problems too. What do you think?

Balaji Srinivasan (57:23)

I think Li Qiang is very Competent. And he is potentially the number two after Xi. I think very few Americans even know who the. The seven. I'm sure I'm butchering the pronunciation, but it's like L, I, Q, I, A, N, G, I think.

Dan Wang (57:37)

Yeah. And you know who this guy was? This guy was the party secretary of Shanghai during the worst lockdown ever attempted in the history of humanity. Every other democracy was able to toss out the bastard who enforced Covid on their policies. And then what the. What did the Chinese decide to do? Elevate this guy into premier? That's weird.

Balaji Srinivasan (57:54)

Wait a second. But Trump was the one who did COVID lockdowns in the U.S. he's president again, right? So I'm not sure. I'm not sure that's true. Well, but yes, but I mean, Republicans ultimately didn't care that much about, like, CO is a very complicated kind of thing because everybody switched positions on it like four times. Like, at first, Democrats said it was racist to talk about COVID and Trump was calling it the China virus is Jan. Feb. 2020. And then Trump started saying, oh, okay, you know, we need to start, you know, covering up the testing and showing, you know, that the numbers going up. And Democrats started saying it was a big deal. Then Democrats flipped in the US and said, actually, racism is a real pandemic and we need to go and do Black Lives Matter riots. And Trump was doing the warp speed vaccine. And Kara said that she wouldn't take a Trump vaccine then. And the vaccine was actually blocked. People said that they were, you know, I think, gosh, I forgot this guy's name. There's a scientist. This report in like MIT Tech Review that they were blocking the vaccine's approval until after the election to make sure Trump didn't get a bump from the vaccine. Vaccine, which is a big deal, by the way, because a close election in 2020, then after the election, suddenly the vaccine became a tool in the hands of the Democrats. And fundamentally, I just looked at that as, as something where it wasn't a scientific issue. It was just something that was a tool in a power struggle. And similarly in China, I think it was just a tool for Xi to get his third term. It was just that I don't think they actually believed in it.

Dan Wang (59:26)

Well, let me, let me give you an alternative view. But first of all, let me say that, you know what the Americans got and the Chinese didn't? The vaccine. The MRNA vaccine.

Balaji Srinivasan (59:37)

Yeah, Sinophar did.

Dan Wang (59:38)

Important, right? Pretty important. I mean, the Chinese were locking people up and swabbing their noses and mouths, you know, every other day. And they did not do the vaccines, which is really, really strange. They were just using police to keep shutting people in. I think that after living in China, after living in Shanghai in 2022, what I observed was that, yes, politics was part of it. Xi's coronation. I feel like Xi felt like he had the coronation in the bag. And he did the most blatant possible insult towards the Shanghainese by elevating their most hated politician into the head of premier. And I was surprised that I would have been surprised if Li Qiang was still vice premier, one of the four vice premiers after this, and then he was elevated to be premier. Think about how that distorts the incentive structures of all of these other party secretaries who thought, this guy messed up big time and he gets promoted. I was living in China and I felt that the protesters did play perhaps some role in showing Xi that they are dissatisfied. I was living in Shanghai. I went to one of the protests the day after that, all of these youths staggered out of their cocktail bars and started chanting, down with Xi Jinping. Down with the Communist Party. Which was kind of.

Balaji Srinivasan (60:52)

Yeah, that was very unusual. I remember because. Very unusual to see that. Because usually it'll be something where they're just critiquing like a local party person versus the big dog or what have you.

Dan Wang (61:02)

It's not their fault. They had too many of these Western cocktails in the French Concession. But I think the other big thing was that I felt very strongly that the local governments everywhere throughout China, especially in smaller cities that are not as wealthy as Shanghai, they could no longer enforce zero Covid. They had just no state capacity to do onto Shanghai what Li Tian did onto Shanghai. And they had given up. They were really exhausted. And I think when the virus started really spreading in Beijing, the central government took a look at itself and said, can we, the central government, enforce a lockdown upon the central government? And then they decided no and threw up their hands. And then they completely let this whole thing collapse in one.

Balaji Srinivasan (61:41)

Yeah.

Dan Wang (61:41)

In 2023. It sounded like a mistake to me. Didn't have to happen this way. Because you know what? They didn't have vaccines.

Balaji Srinivasan (61:48)

Yeah, the Chinese vaccine did not work. So I'll agree with you on all of that, basically. And I know that the Shanghai lockdowns were actually like, seriously house, you know, like house arrest type things. And people who were zillionaires or whatever were literally locked in their house and people like, had pregnancies, messed up all kinds of bad stuff. Happened during that time period. So I will completely agree with you. I don't think China gets everything right at all. I I just, however, think they're messing up less. And the reason I say they're messing up less is if you take a flight from San Francisco or Seattle or LA or any western city which has syringes and refuse and drug addicts on the street and people attacking you as you walk down, and so on and so forth.

Podcast Narrator (62:41)

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