Sinica Podcast Episode Summary

Episode Title: Kyle Chan on the Great Reversal in Global Technology Flows
Date: February 18, 2026
Host: Kaiser Kuo
Guest: Kyle Chan, Fellow at the John L. Thornton China Center (Brookings), author of the High Capacity newsletter

Overview

This episode features a wide-ranging, in-depth discussion between host Kaiser Kuo and Kyle Chan about the so-called “Great Reversal” in global technology flows—Chan’s observation that, after decades of Chinese firms importing and scaling Western know-how, Chinese companies in sectors like electric vehicles, batteries, robotics, and biotech are now pushing the global frontier and exporting both expertise and products. The conversation also explores the persistent complexities of US-China tech interdependence (recoupling, despite political decoupling), the role of development strategy and industrial policy, and the changing global landscape as other countries and companies adapt to intensifying tech rivalry.

Key Discussion Points & Insights

1. Kyle Chan’s Intellectual Trajectory and Systems Perspective

• Development as a Core Interest: Chan began with an interest in how countries achieve development, a question that led him to focus on China as a case study due to its pivotal role in modern development.
  • “So this idea, which seems almost antiquated now, this idea that countries want to get richer, they want to become more educated...how to obtain these is...one of the most fascinating questions and one of the most important...for me, China...is one of the most fascinating case studies.” (07:42)
• Chicago School Economics & Disillusionment: His training at the University of Chicago provided rigorous market-centric frameworks, but left him unsatisfied due to their underestimation of institutional dynamics and coordination failures, which he witnessed firsthand during research in China and India.
  • “I was deeply unsatisfied with this view of how the world actually is unfolding...economists kind of dismiss as secondary—externalities, coordination problems, market failures...to me, I saw that as the story itself.” (09:07)
• Systems Thinking & Railways: Studying China’s railway boom helped Chan understand how infrastructure, state enterprises, ministries, local governments, and foreign technology interact—revealing the overlapping, interconnected ecosystem that later informed his work on technology diffusion and industrial policy.

2. The "Great Reversal" and China at the Tech Frontier

• What's New About China's Rise?
  • Historically, Asian countries (Japan, Korea, Taiwan) incrementally learned from and ultimately innovated within select technological niches, but China is now demonstrating “world-historical” breadth and scale across multiple tech domains.
  • “I do think the kinds of scale and the kinds of scope that we're seeing in China's overall sort of tech industrial ecosystem is, for lack of a better term, sort of world historical.” (16:25)
• Frontier Innovation vs. Scale/Execution:
  • Examples such as BYD’s megawatt EV charging (allowing EVs to charge as fast as fueling gas cars), CATL’s partnerships with Ford for core battery IP, and flexible, fast-moving manufacturing ecosystems illustrate how Chinese firms move from catch-up to true innovation—and do so at scale and across firms, not just star national champions.
  • “What BYD has done is...released new capabilities for their batteries...you can charge basically an EV as fast as you can...fill up a tank of gas. And that's a real game changer...that level of technology is just completely new in the world.” (19:42)

3. Long Game Industrial Policy—Patience & Adaptability

• Decades of Persistent but Adaptive Strategy: China’s approach, while sometimes derided as slow or inefficient (e.g., early joint ventures in the auto sector), has benefited from a willingness to endure long payoff timelines, experiment with policy tools, and pivot as opportunities emerged—culminating in today’s EV, solar, and battery powerhouses.
  • “For a while this [auto JV] was seen as a slow moving, even sclerotic kind of industry...But then later on you have this shift into electric vehicles...overtaking on the curve or changing lanes to overtake.” (25:25)
• Portfolio Approaches & Course Corrections:
  • China pursued multiple paths in parallel (BEVs, hybrids, fuel cells), accepted detours, and doubled down once a technological avenue (e.g., pure EVs) began paying off. This patience and adaptability contrasts with the West’s short-term pressures (quarterly earnings, electoral cycles).
  • “You might have thought it was a failure in 1990...2001...2015. But now we look back and...sometimes seems like some great master plan...they were willing to...take steps to figure out how to get there.” (29:10)

4. Possibilities and Limits of Western Industrial Strategy

• U.S. Attempts at "Re-Indstrialization":
  • The U.S. has made key moves (CHIPS Act, EV incentives, clean energy investing) that indicate willingness to try long-term policy, but political volatility (administration changes, lack of buy-in for green policy) undermines progress.
  • “...what’s the opposite of industrial policy? Can you slow your own tech industrial development? And I think the answer is yes...” (32:07)
• Bipartisan Consensus Only in Select Sectors:
  • Semiconductors are seen as security-critical enough to drive consistent, cross-party support—one positive example amid otherwise fragmented effort.

5. Recoupling Amid Decoupling: Why Tech & Markets Resist Separation

• Inescapable Incentives for Partnership:

  • Companies and engineers keep finding reasons to work together over the best tech (e.g., batteries, robotics, automotive platforms)—forcing "quiet recoupling" even as governments push decoupling.
  • Examples:
    • Google’s Waymo sourcing EV platforms from China’s Geely.
    • American robotics startups buying critical sensors, servos, and hardware from Chinese suppliers.
    • U.S. research labs using Unitree humanoid robots, available easily via global e-commerce.
  • “Waymo...using Zeekr electric vehicles from China’s Geely ... Unitree robots...are very popular in...American Robotics Labs ... buy them off the shelf...you can build off that platform as an American researcher...” (35:54)

• Gravity Model for Tech Collaboration:

  • The sheer "mass" of the U.S. and Chinese tech economies keeps them locked in mutual pull, though political "distance" can weaken ties.
  • “...gravity falls off pretty fast...politics has been trying very hard to increase that distance, and every little bit of distance really diminishes gravity.” (39:41)

• Recoupling & Decoupling Both Often Overstated:

  • In practice, decoupling remains limited in many sectors, while recoupling is also sector-specific. The deeper China moves into global tech leadership, the more the U.S. has reason to acquire, not just block, Chinese innovations (esp. batteries, biotech).

6. Layered, Variegated Interdependence

• Not All Dependencies are Equal or Symmetrical:
  • The U.S. remains the source of world-leading software, university talent (AI, coding, infrastructure), and institutional know-how. Chinese developers and companies still covet access to American platforms (GitHub, AI toolchains), and many top AI researchers in the U.S. have Chinese educational backgrounds.
    • “...from the Chinese side, there's still a lot of American products, services, institutions that are in high demand and that are very, very cool to use in China...talent and universities...Chinese best and brightest...want to study at American universities...” (46:32)
• Human Capital and Knowledge Flows:
  • Despite tensions, student flows, talent recruitment, and alumni networks tie both countries’ innovation ecosystems tightly—creating dual vulnerabilities if wholesale separation ever accelerates.
  • “...quite a number of those researchers that Meta scooped up through this like very ambitious talent recruitment program were Chinese or Chinese educated...” (48:08)
• Weaponized Interdependence:
  • Growing recognition that any linkage can become a leverage point—“weaponized interdependence” is now an ever-present lens for policymakers.
  • “...it would be weaponized interdependence. ...every new linkage just seems like it immediately gets scanned for vulnerability...” (53:07)

7. Corporate Adaptation and Decoupling Work-Arounds

• Firm Level Strategies for Survival:
  • Companies like Manus (agentic AI) and Heygen (avatar/AI video) have responded to rising geopolitical barriers by changing ownership, relocating talent and HQs (to Singapore, LA) to avoid being caught in regulatory crossfire—often improvising case-by-case.
  • “I think it's generally the latter [improvisation], where everyone's trying to figure out a way to survive and thrive, ideally. And they're willing to be pragmatic and just try to navigate whatever the geopolitics of the day is...” (61:10)
• Global Supply Chain Hedging:
  • Both American and Chinese firms are shifting manufacturing, R&D, and deployment geographically (India, Southeast Asia, Hungary, Brazil) to respond to tariffs, controls, and political uncertainty.
  • “...you see like BYD trying to build out plants in Thailand, in Hungary, in Brazil. I think that these are all different ways to kind of deal with a changing geopolitical and trade environment...” (64:13)

8. Middle Powers and the Global South: Opportunity & Squeeze

• Third Countries as Intermediaries:
  • Some, like Gulf states, Southeast Asia, India, and possibly parts of Europe, have found openings to play both sides, attracting investment, tech transfer, or hosting outsourced production. (67:37)
  • “...with the tariffs on Chinese exports coming from the US...Southeast Asia was like in the perfect spot for a lot of companies...to start to move some of their production out to places like Thailand, Indonesia and Malaysia and take advantage of almost sort of this geopolitical arbitrage moment...” (67:41)
• Risks of Squeeze or Forced Choice:
  • Conversely, as rivalry sharpens, these same countries may be pressed to choose sides, risking cut-off or retaliation, especially around strategic sectors like chips or cloud/AI data centers.

9. What Policymakers Overlook: Engineering Resilience, Not Just Division

• Beyond Slogans—Managing Interdependence:
  • The challenge is less about all-or-nothing decoupling, more about which specific forms of connection are tolerable or risky—and which policies actually support resilience versus self-sabotage.
  • “...the challenge is less about decoupling or engagement as slogans and more about actually engineering resilience, deciding which forms of interdependence we can live with, which ones we can't, how to manage the trade offs…” (70:19)
• Beware Unintended Consequences:
  • Blanket bans or tariffs can backfire; e.g., blocking DJI drones without building a domestic base, or imposing tariffs on essential manufacturing components ends up raising costs and obstructing domestic re-industrialization.
  • “...it might be easy to reach for a blanket solution like you know, ban DJI drones, but then you don't have a plan for building up a domestic industry of your own...tariffs are actually increasing the costs of the components...” (72:25)

Notable Quotes & Memorable Moments

• On China’s Strategic Shift:
  • "I do think this time is different... the breadth of the strength in all these different areas ... in China’s case, these are all blending together... strength in one area starts to feed into another..." (16:25)
• On US Industrial Policy Challenges:
  • "What's the opposite of industrial policy? Right. Can you slow your own tech industrial development down? And I think the answer is yes, unfortunately." (32:07/Kaiser)
• On Recoupling Amid Decoupling:
  • "I try to point out some concrete cases, where you see some of this tech recoupling. Like for example, Google's Waymo ... another example is robotics ... another example actually is ... Unitree, the Chinese humanoid robot company ... their robots are very popular in other parts of the world, including at American Robotics Labs." (35:54/Kyle)
• On Talent Flows:
  • "Quite a number of those researchers that Meta scooped up through this like very ambitious talent recruitment program were Chinese or Chinese educated ... these town flows, the human capital, the institutional sort of like co development, like it's very, very much deeply embedded." (48:08/Kyle)
• On the Dangers of Over-Securitization:
  • "You can really end up shooting yourself in the foot if you are overly paranoid ... you kind of retreat back within your own sort of territory, within your own sort of sphere, and your ability to not just innovate at home, but to be competitive globally starts to shrink." (56:04/Kyle)
• On Policymaker Blind Spots:
  • "I would urge especially us policymakers to think about where we want to build up that domestic capacity, how we want to build up that kind of resilience, what it's really aimed at, what is really feasible and what's really the best approach here." (72:25/Kyle)

Timeline of Key Segments

• Kyle Chan’s origins as a systems thinker: 07:42–12:44
• Defining the “Great Reversal” and China's broad tech rise: 12:44–19:12
• Concrete examples of China at the tech frontier: 19:12–22:51
• Industrial policy—patience, adaptability, and tactical shifts: 25:25–31:16
• Limits and prospects for Western industrial strategy: 31:16–35:54
• Recoupling in practice—tech, robotics, auto supply chains: 35:54–44:44
• Deeper analysis of US-China complementarities: 44:44–51:16
• Rethinking dependencies and weaponized interdependence: 51:16–56:04
• Corporate adaptation & survival playbooks: 57:43–64:13
• Middle powers, global South, and “geopolitical arbitrage”: 64:13–70:19
• The real challenge: engineering resilient, nuanced interdependence: 70:19–73:50

Recommendations

Kyle Chan

• People:
  • Katrina Northrup, outstanding China reporter at The Washington Post (75:20)
  • Grace Xiao, author of the AI ProEM newsletter, expert on Chinese AI companies (75:53)
• Media:
  • Wired magazine's "Made in China" newsletter by Ziya Yang and Louise Matsakis (78:07)
  • The Wire China—a publication focused on China’s economy and tech, with deep, innovative reporting (78:07)

Kaiser Kuo

• Book: The Wall Dancers by Eileen Liu – stories about the Internet in China and the life experiences of real people in online communities (79:20)

Conclusion

Takeaways:

• The US-China technology relationship is shifting from unidirectional knowledge transfer to a more complex, interactive, and even bidirectional dynamic.
• Both decoupling and recoupling are happening simultaneously—structural market and technological incentives resist political efforts to divide, but adaptation is happening both in firms and globally.
• Policymakers need to move beyond zero-sum, reactive measures to a nuanced, strategic approach—balancing resilience with openness and accepting that some forms of interdependence foster innovation and competitiveness.
• The rest of the world is both exposed to new risks and presented with new strategic opportunities as the US and China’s rivalry plays out.

Memorable Closing:
"You can really end up shooting yourself in the foot if you are overly paranoid...you kind of retreat back within your own sort of territory, within your own sort of sphere, and your ability to not just innovate at home, but to be competitive globally starts to shrink." (56:04/Kyle Chan)