Solutions with Henry Blodget

Episode: "China Is Winning. How Can the U.S. Catch Up?"

Date: February 23, 2026
Host: Henry Blodget
Guest: Steve Ratner (CEO of Willett Advisors; former "car czar," Obama admin.)

Episode Overview

This episode tackles a crucial question for the American future: How is China pulling ahead of the U.S. in key industries, and what should America do to catch up? Henry Blodget is joined by Steve Ratner, an investment CEO and former Obama administration official famous for leading the U.S. auto industry bailout. Ratner outlines how China’s focused industrial policy, investment in STEM, and relentless engineering culture are leaving the U.S. behind, and offers big, sometimes provocative, solutions for American renewal.

Key Discussion Points & Insights

1. Is the U.S.-China Relationship Zero-Sum?

• [02:49] Steve Ratner: "I don't think we have to win. I think both countries in theory anyway, could win. But ... China at the moment is our biggest competitor."
• Ratner comments that U.S.-China trade is often framed as a win-lose scenario, but competition for resources and industries has always existed among nations.

2. Is Europe "Doing Fine"?

• [03:58] Steve: Pushes back on the view that Europe is prospering: "To say Europe is doing fine, I think is a, frankly, a, a gross overstatement...the difference in the standard of living between Americans and Europeans has diverged enormously in the last 10 years."
• Blodget counters that quality-of-life in Europe may be higher for many; Ratner pivots focus to economic growth and standards of living.

3. The Evidence: How China Pulled Ahead

• Tech & Biotech:
  • [05:04] Steve: "China is ... developing more and more technologies that are competitive with ours...China now conducts as many clinical trials as we do, and they're out licensing drugs...In AI...they're not that far behind us and they're racing furiously to catch up."
• Electric Vehicles (EVs) & Cars:
  • [06:33] Henry: U.S. consumers are blocked from buying superior Chinese EVs by tariffs & regulation: "People are blown away by how good they are and how cheap they are relative to the cars in the United States."
  • [07:40] Steve: Chinese EVs are "demonstrably as good or better than ours, they're a lot cheaper...the decision we effectively made as a country is we want to stay in the automobile production business. And therefore, we are going to effectively ban [Chinese EVs]."
• Trade Surplus:
  • [05:04] Steve: "China had a record trade surplus of $1.2 trillion last year...there's a fair amount of what we call trans shipping going on."

4. How Did China Get There? (Industrial Policy)

• [10:48] Steve: "We would call what the Chinese do state-directed capitalism. And what they do is they sit down and they say, we want to out-compete the US in cars. So what do we have to do to do that? ...China graduates this extraordinary number of engineers and they get to work."
• The U.S. system: "Start-stop" policy cycle due to political shifts; lacks continuity.

5. Why U.S. Industrial Policy Fails

• [12:52] Steve: Criticizes "industrial policy" à la Trump: "That's not really industrial policy. That's like, well, I think I can grab some money here...He's just trying to put his hands in a cookie jar. That's not a coherent policy."
• Real policy requires focus, continuity, and technical competence—not just kneejerk tariffs.

6. What Would a Coherent U.S. Industrial Policy Look Like?

• [13:42] Steve:
  • More tax credits and mandates for EVs and future industries
  • Government-led push with follow-through (unlike the botched EV charging buildout)
  • Avoid “lurches” between administrations ([14:42]): "It's just very hard in our system to get stuff done...when you have a change in administration...you get these enormous lurches in policy which can't possibly be good for the economy."
• National Industrial Development Corporation Proposal
  • [15:48] Steve: "What we would need is some kind of a national industrial development corporation that the government would fund, but that would be removed from politics, removed from bureaucracy..."

7. The Need for Executive Strength & Permitting Reform

• [24:39] Henry: Asks if America actually needs a more powerful executive—Chinese style?
• [25:28] Steve: Praises the Chinese meritocratic process; supports a stronger U.S. executive: "I personally am in favor of a stronger executive...you put somebody in the job, you give him four years. If he doesn't work, you fire him."
• [21:05] Steve: Regulatory obstacles cripple domestic processing (e.g. copper smelting sent to China)—"is it really any better for the planet for the Chinese to be polluting...then for us to be doing it here with more state of the art climate controls?"

8. Infrastructure: Trains and Energy

• High-Speed Rail Example:
  • [23:05] Steve: "California high speed rail...years and years over budget, tens of billions of dollars over budget...because of the difficulty of getting rights away."
• Electricity Gap:
  • [28:10] Steve: "China...sat down and said, we need more electricity. Let's go out and do it. And it's a kind of all of the above strategy...We have no nuclear coming online. And indeed, some that's being shut down."
  • Nuclear power necessity: "[Nuclear] should even potentially be the main part of the solution, because nuclear produces what's called baseload power..."

9. The STEM Crisis & Education

• [32:05] Henry: How do we fund and staff a science/engineering renaissance in the U.S.?
• [32:18] Steve: Calls for a new "Sputnik moment" to trigger national resolve; U.S. needs to borrow/invest wisely in future-oriented research.
• [33:36] Steve: "We could go out and create a national pool of capital of $100 billion or $200 billion and go out and, and do some very productive things with it. But the STEM problem is not really a problem of money. It's really a problem of getting young Americans excited about the idea of becoming engineers again."

10. AI & Technological Disruption: Risk or Opportunity?

• [36:17] Steve: On jobs & AI: "There is no technological innovation in human history...that has not ended up resulting in more jobs rather than fewer jobs. AI is a huge enhancement of...productivity...At the end of the day, AI makes the economic flywheel go faster..."
• Warns about short/medium-term disruption: "[For] 50 or 55 year olds who may lose a job...that requires a strong social safety net. ...kids coming out of college now…it's not that different from a recession...the economy finds its footing."

11. Role of Tariffs & Trade Policy

• [43:46] Steve: Tariffs can "protect our domestic manufacturing industries and get them started. So to use a tariff to get an industry started...that's not the craziest thing in the world as long as we start building them. But if you just throw tariffs on for the hell of it, that doesn't accomplish anything."
• [46:38] Steve: Recommends "surgical" trade response: punish unfair play, not simply excellence. "You don't use it because somebody's doing something better than you're doing it..."

12. The Missing Ingredient: National Hunger and Focus

• [41:45] Henry: "We kind of have to get that fire again, individually and as a country to compete..."
• [40:14] Steve: "Every time I go to China, I am just dazzled by the work ethic and the drive to succeed. I mean, these are people who just want to get rich, and they're obviously been getting rich at a pace unprecedented probably in human history."

Notable Quotes & Memorable Moments

• Steve Ratner [12:52]: “President Trump’s version of industrial policy is a good example...That's not really industrial policy. That's like, well, I think I can grab some money here...That's not a coherent policy.”
• Steve Ratner [15:48]: "What we would need is some kind of a national industrial development corporation that the government would fund, but that would be removed from politics, removed from bureaucracy, removed from all the red tape..."
• Steve Ratner [25:28]: "They don’t pick some former reality TV show host, failed real estate developer and say, hey, you're now in charge," referring to the Chinese system's meritocracy versus American electoral unpredictability.
• Steve Ratner [32:18]: "Maybe a good analogy for all this was Sputnik...Sputnik did provide that kind of wake up call. I, just, as I’ve been suggesting, I’m not sure in the case of China...what that wake up call will be."
• Steve Ratner [36:17]: "There is no technological innovation in human history...that has not ended up resulting in more jobs rather than fewer jobs."
• Steve Ratner [41:45]: "Every time I go to China, I am just dazzled by the work ethic and the drive to succeed."
• Steve Ratner [43:46]: "To use a tariff to get an industry started...that's not the craziest thing in the world as long as we start building them."

Important Timestamps

• [02:49] – Is the U.S.-China relationship really competitive-to-the-death?
• [05:04] – How China has caught up and where the U.S. is losing (biotech, AI, EVs)
• [07:40] – The U.S. car industry, EVs, and cost for consumers of protectionism
• [10:48] – China’s model: State-directed capitalism, STEM focus, and industrial policy
• [13:42] – What would a U.S. equivalent policy look like? National development corp. idea
• [21:05] – Regulation and permitting gridlock: smelting, copper, and infrastructure
• [23:05] – U.S. infrastructure woes: High-speed rail example
• [28:10] – China’s "all of the above" electricity strategy and U.S. nuclear inertia
• [32:18] – The "Sputnik moment" and the urgency for U.S. investment in STEM
• [36:17] – AI: Job threat or productivity engine?
• [40:14] – The need for revived U.S. work ethic and hunger
• [43:46] – Tariffs: When they're useful and when they're not

Actionable Solutions Highlighted

• Establish an independent, politics-insulated National Industrial Development Corporation
• Restore long-term, stable industrial policy (tax credits/incentives, regulatory clarity)
• Reform permitting and regulation to allow efficient infrastructure and resource development, balancing environmental and economic concerns
• Invest heavily in STEM education and research; culturally valorize engineering
• Renew support for nuclear energy and modernized energy grid
• Recognize the necessity for both “carrots and sticks” (incentives and trade defense), but avoid reflexive protectionism
• Encourage a collective American "hunger" for progress and competition with China

Tone: Candid and urgent, sometimes wry; Ratner repeatedly emphasizes realism about U.S. shortcomings and the need for bold, structural solutions.

For Listeners Who Missed the Episode:
This conversation is essential for anyone interested in the U.S.-China contest, economic strategy, or the future of American policy. Ratner’s analysis is rigorous, data-driven, and doesn’t pull punches—he insists that half-measures and partisan lurches won’t suffice if the U.S. wants to catch up with China's relentless industrial advance.