Why is China smashing its tech industry?

https://noahpinion.substack.com/p/why-is-china-smashing-its-tech-industry

by exceptione • 5 years ago

311 383 5 years ago

noahpinion.substack.com

rektide2• 5 years ago

Governments of the Industrial World, you weary giants of flesh and steel, I come from Cyberspace, the new home of Mind. On behalf of the future, I ask you of the past to leave us alone. [1]

Because cyberspace is ascendant over the old powers. Alas, sure, it's a pretty sad capitalist shell of what cyberspace could be, but it's still striding past the encumbered old giants.

[1] https://www.eff.org/cyberspace-independence

spiritplumber• 5 years ago

I miss being that optimistic. What happened?

hprotagonist• 5 years ago

and down they forgot/as up they grew

tablespoon11• 5 years ago

I miss being that optimistic. What happened?

The optimism turned out to be naive? I mean, regardless of whatever "cyberspace" was originally imagined to be, in actuality it turned out to be bunch of Facebooks. And more often than not it's allowed low-quality garbage to be spread with unprecedented effectiveness.

Or to summarize in 1996 terminology: cyberspace turned out to be land of timecubes.

hosh• 5 years ago

Software ate the world.

I also remember feeling that optimistic about technology. It wasn’t until this past year, I am getting an inkling of what happened. It’s a continuation of much longer trends that I didn’t see until I started studying Carol Sanford’s work on regenerative paradigms, responsible business, etc.

The dominant worldview these days is that of the machine world view. It sees the world as complex machinery, with people as cogs. It denies the power of living systems to be able to live and grow on their own, instead, forcing them to intermediate through the machine.

As such, software eating the world is a continuation of that worldview.

I think perhaps, this is the “punk” in cyberpunk; that even though people become part of the machine, they can still change the world for the better against old powers. Old powers didn’t understand how the emerging technology works, so there’s a window of time. Perhaps, that, technologists will maintain a tech gap over old powers. But the old powers had been eaten by machines a long time ago, and when new tech companies arose, that machine world view became further entrenched.

It didn’t solve for the fundamental problem: living systems are not machines. We are capable of growing and changing on our own. We are not consumers. We are not users. Living systems are what makes software come alive; why would we want software to eat us?

ThrowawayR2• 5 years ago

What happened was that the silly people who wrote that twaddle managed to forget (somehow) that the millions of miles of fiber optics and copper cabling, the millions of processors that go into servers and backbone routers, the thousands of satellites and microwave links, and so forth are all possible only because of the "Industrial World" and all the uncounted thousands of acres of land on which that infrastructure rests and the businesses that run them are under the jurisdiction of "Governments".

There never was and can never be a cyberspace independent of the physical world. All there was was a brief moment of being ignored until the powers that be realized "Oh, hmm, looks like that Internet thingamajig is kind of important now; better start ruling it."

cainxinth2• 5 years ago

They want a big, powerful, capable tech industry... that will never even think of challenging the supremacy of the government.

This is their way of reminding the tech sector of that latter part.

deltasixeight5• 5 years ago

This article is more than your classic "the CCP is just making moves to solidify it's own power."

The article claims the actions taken by China also represent real philosophies about what constitutes economic health. They don't want their greatest minds optimizing ad tech or finding tax loop holes.

whatshisface2• 5 years ago

Tax loopholes would be accounting, not technology.

cainxinth2• 5 years ago

There’s some truth to that, but call me cynical, when asked to guess whether a nation’s actions are primarily motivated by power seeking or philosophical principles, I usually assume power was the dominant factor.

dotcommand3• 5 years ago

This article is more than your classic "the CCP is just making moves to solidify it's own power."

"And so, in classic CCP fashion, it was time to smash."

It's your standard state propaganda.

At least he attempts to cover his bases: "China’s leaders famously want to prevent the emergence of alternative centers of power, but is the West so different in this regard?"

"For those outside China’s byzantine, opaque nexus of party, government, and big business, it’s very difficult to figure out what’s going on." I guess Noah Smith is in the inside so he knows his stuff?

It's your standard "CCP bad because CCP is friends with iran due to BRI" propaganda you find all over traditional and social media.

The real question is who is noah smith and why was his article spammed on hn? That would be an interesting article.

bsder• 5 years ago

This breaks down when you consider that they are smashing Alibaba. Alibaba, like Amazon, is more about logistics than tech.

It's hard to argue that shlepping stuff around efficiently isn't "economic health".

As much as I hate Amazon and WalMart for being predatory, I applaud their logistics advances.

ru552• 5 years ago

I think it's because they want their best and brightest working on physics, materials, technological breakthroughs, etc., instead of ad tech.

dicomdan• 5 years ago

You’re giving a lot of benefit of the doubt to the dictatorship. Establishing complete control over emerging power structures (tech industry) is more likely to be their goal.

andy_ppp7• 5 years ago

We don’t actually know why anyone in power does anything. One thing I do know is we as the West need to figure out how to come together and defend democratic and liberal values, as without them we are seriously lost. We should start by not giving any more money and technology to a Chinese state that clearly do not have our best interests at heart. I think the west is in real danger of just falling apart over the next 50 years if we lose our reasons for existing and instead spend our time arguing about cultural issues. We spend so much time right now looking inward at our small differences we can’t see the reason why our nations became worthwhile in the first place.

88840-8855• 5 years ago

In my eyes China is a technocratic autocracy, not a dictatorship. This would explain the hypothesis why they want their brains to work on rockets rather than ad tech, as OP assumed.

deltasixeight5• 5 years ago

This is a one sided view and also represents classic bias of the western viewpoint.

Sure a "dictator" (more accurately "central power" for China) wants to consolidate power but to think the dictator is a one dimensional being and that all actions a dictator takes only serves that single minded motivation of power solidification is really not reasonable.

Consolidating power is only one aspect of their motivation that much is true. However the article is not about this aspect of the CCP. The actions taken by the regime here represent broad views about what constitutes economic health. The OPs comment is spot on, and captures the main point of the article.

ugjka• 5 years ago

He who makes the hottest chips is he who rules

LatteLazy• 5 years ago

I don't think you're wrong, but to air the other side: people don't want breakthrough tech, they want cheaper mortgages. That's why we spent trillions on mortgage subsidies and haven't even tried to build a Mars colony.

The USSR fell because people didn't care about space exploration and Opera, they wanted washing machines and pop music.

rvn10452• 5 years ago

The scale that these companies operate on requires huge innovations in software engineering and computer science. Think about all the distributed systems that have come out of places like Facebook and Google over the last 2 decades.

infogulch• 5 years ago

Which they promptly keep to themselves and utilize to maximally exploit their users time and attention. Technology is a tool, not a generic force for good. Tools are agnostic to human value. If technology is being used exploitatively then it's a problem.

dilap• 5 years ago

I think that's overstating. To be sure some real tech challenges in distributing work horizontally, but I don't think it's created anywhere near the amount of value that's come out of e.g. space race research.

drevil-v2• 5 years ago

Distributed systems that, more or less, are only really needed to run similar social networks as Facebook or Google?

That’s like saying the Cook maybe fat and morbidly obese but look at how efficiently he consumes such a large number of calories every day.

usaar3332• 5 years ago

Unfortunately, the best and brightest often also like money.

This incentivizes said people to emigrate.

jayd16• 5 years ago

So what happens when non-Chinese software and service tech continues to dominate because China decided it wasn't important?

Clearly these sectors are powerful or they wouldn't be targeted. Whats the plan to make them obsolete beyond taking Chinese software down a peg?

sudosysgen11• 5 years ago

It will never dominate in China because of the Great Firewall, and Chinese ad-tech will never dominate abroad for similar reasons.

bennysomething7• 5 years ago

Google works on and tech so it can fund everything else it does, i.e. the services we actually use.

908B64B197• 5 years ago

I think a lot of western bright minds would be working on physics, materials, technological breakthroughs if the pay wasn't abysmal and working conditions exploitative.

swagasaurus-rex• 5 years ago

I know several people that got STEM degrees. One worked for Boeing, moved into progamming at an ad tech company. One had a math degree, got into programming at a real estate firm. One had a physics degree, is now an electrician.

The ridiculously expensive college education can't even prepare us for our own workforce, which has very little demand for engineering, sadly.

whatshisface2• 5 years ago

Don't assume that there's a strategic explanation concerning externally visible factors when the true explanation may concern strategy, but only around internal factors.

caeril2• 5 years ago

China may simply see things differently. It’s possible that the Chinese government has decided that the profits of companies like Alibaba and Tencent come more from rents than from actual value added

Excellent observation, and I hope, for China's sake, that this is the reason.

The United States is likely in for a long-term rude awakening when it finally realizes that an economy predicated on negative-value-add activities like clicking heart icons on photos, repackaging financial securities into products with impossible-to-detangle risk profiles, advertisement and addiction optimization, and political outrage, will not remain any definition of "global superpower" for long.

Facebook and Netflix are excellent examples of companies that contribute greatly to our GDP whilst simultaneously draining our reserves of actual capital and mental health.

anotherman554• 5 years ago

I'm surprised you put Netflix in there with Facebook. Do they not have television in China?

nceqs3• 5 years ago

Yeah I agree with the FB part but Netflix? The chinese audience consumes huge amounts of video content.

duxup2• 5 years ago

The problem is making those predictions. I'm not sure anyone out there is able to decide 'this business is a net good only do that' and come out ahead without stumbling just as much.

That's pretty much a game of predict the future, get it wrong on economy scale and you don't have anyone doing anything not according to plan... you can / will get a disaster even if you get it right here or there.

And I'm not sure that's the point anyway. China could simply ban "clicking heart icons on photos" and wipe out domestic demand outright, and as far as risky financial deals ... China seems to have no problem with that.

tablespoon11• 5 years ago

Or even more succinctly: financial value != value to society. Sometimes there's alignment, but very frequently there is not.

billytetrud5• 5 years ago

When it's out of alignment, usually it's because of regulatory capture.

jjoonathan2• 5 years ago

Yeah, the day I realized that the economic notion of value was weighted according to the wealth of those creating the demand, while the colloquial definition generally isn't, a lot of mismatched puzzle pieces fell into place. It was probably the single most successful update to my worldview (measured in terms of predictive power) that I have ever made.

bennysomething7• 5 years ago

Who's "value to society" people's values vary that's why we have markets so people can decide what they value by deciding to buy it.

mjol• 5 years ago

If you really believe that entertainment doesn't improve the human experience, I feel sorry for you.

yarky• 5 years ago

The OP is probably talking about the psychological impact of washing Netflix restlessly during long periods of time. That generates GDP, but the net impact on society might not be positive. Same thing with the psychological issues associated with social media addiction.

nathias• 5 years ago

the US entertainment doesn't improve the human experience

goodpoint3• 5 years ago

There is the occasional bit of entertainment and there is https://en.wikipedia.org/wiki/Escapism#Escapist_societies

One thing is watching some dumb action movie once a week, another thing is filling one's free time with entertainment every day.

Rapzid• 5 years ago

economy predicated on negative-value-add activities like clicking heart icons on photos

I think you have this backwards. These social networks are predicated on the businesses that are generating enough revenues to spend on ads with them.

EDIT: To add some more context USA GDP in 2019 was 21.4t . Facebook's revenue is 0.004 of that number.

billytetrud5• 5 years ago

You have a rosy view of the oppressive actions of an authoritarian government. It should be noted that the author does not think that is the reason China is doing what it's doing.

Netflix is not draining capitol and not sapping mental health. It was a massive innovation that saved people lots of time (wasted watching TV ads) and money ($10/mo rather than $100/mo for TV). It worked so well every other major media company has copied it's model.

Facebook is often shit on, but it was useful in it's time. It's a tool people can decide to use oe not use, and how to use it if they do. We're learning as a society how to do this.

But it's very clear the solution is not for a government to smash those companies. That is very clearly an evil action.

epivosism3• 5 years ago

Is there a name for the question of distinguishing useful economic activity from rent-seeking? It seems tied up in lots of other system/corruption/control related questions - cancer, budget spending, regulation etc.

It feels like there can never be a trustable implementation of a "value or rentseeking?" oracle, since the system implementing it would also be under selection and pressure from the virtual gains to be had from corruption.

kmeisthax2• 5 years ago

I don't think there is such a name. But you're on the right track about it being difficult to distinguish between value and rent-seeking.

One thing to note is that governments themselves are, by definition, rent-seekers. This is inherent to how a government - a monopoly on the legitimate use of violence within an area - works. Once you are sovereign within a territory you can extract rents in the form of taxes, and if you don't extract enough you will be deposed by someone who does.

Most governments also tend to encourage their own industries to rent-seek as well. If your country needs heavy industry or scientific research or cultural behemoths, it's far easier and politically defensible to construct new narrow property regimes (e.g. copyright, patents, PDOs, etc) for those companies to exploit rather than just paying them subsidies. These regimes can be selectively weakened when you need to build your industry domestically (what the US did to the UK, or what China did to the US) and then strengthened later when you need to protect it internationally (what the US forced into WIPO).

Very little of capitalism is actually adding value, in the sense that you have a business that hires people, buys materials, and turns them into goods and services at a prevailing market rate. At the lowest rungs of the chain, sure - you might have, say, petite-borgeouis crustaceans hiring workers to cook food and sell it to people who need it. But that's not where most of the actual profit is. Compare that to, say, a fast-food franchise; which doesn't usually run any restaurants or sell any food. They instead sell trademark rights and supplier relationships. In particularly egregious systems like McDonalds, they even rent their franchisees the land that the restaurant must be housed in.

Left-wing critiques of capitalism are typically extra-cynical about this, and would consider even the small profit Mr. Krabs makes on burgers to be rent, not value. This is usually in the context of the employee-business relationship, however; not the business-customer one. Small businesses generally don't extract a premium on the goods or services they sell just because they're the only company that happens to own a stove or know some secret recipe. But in the context of employees, they are getting paid less for their labor, albeit in exchange for not having to bear up-front capital costs or deal with inconsistent revenue. Whether or not this constitutes rent or value is most likely a political opinion, not something that you could actually devise some economic criteria for.

exceptione• 5 years ago

I think you are looking for the term Real Economy?

From https://en.wikipedia.org/wiki/Real_economy

"The real economy concerns the production, purchase and flow of goods and services (like oil, bread and labour) within an economy. It is contrasted with the financial economy, which concerns the aspects of the economy that deal purely in transactions of fiat money and other financial assets, which represent ownership or claims to ownership of real sector goods and services."

Mizza• 5 years ago

Hijacking this comment a bit, but I haven't watched real TV in a very long time but have been tuning in again because of the Olympics and Jeopardy.

I'm seeing an incredible amount of ads for companies that let you gamble real money on your phone. Sometimes it's back to back to back to back commercials for online app casinos. This seems really dangerous and a sign of a tragically unhealthy and predatory economy - I can't think of anything more negative-value-add than gambling. Has there been a regulatory change that allows this, or has this been going on for some time?

jurmous• 5 years ago

In the Netherlands gambling is either done by the state owned company with all profit going to state treasury or heavily regulated when done online. All to prevent gambling addiction.

https://en.wikipedia.org/wiki/Holland_Casino

It seems harmful to let gambling be unregulated...

Even loot boxes in games are illegal https://boundingintocomics.com/2020/10/30/netherlands-rules-...

lucasyvas• 5 years ago

I live in Canada and noticed these same ads - what is this garbage? It seemed insanely predatory and unethical.

I've never seen anything like this in my life and had the exact same reaction.

neutronicus2• 5 years ago

I listen to a lot of basketball podcasts and they are all, even the biggest national ones, trying to get people to gamble

It seems like it's gotten a lot worse after COVID, though

whymauri• 5 years ago

Has there been a regulatory change that allows this, or has this been going on for some time?

It was actually less regulated. There were gambling sites for children based on electronic collectibles from video games. It was becoming a billion dollar industry before Steam put their foot down.

A friend was close to launching a venture in the space and their first year revenue projections were around 600k assuming middling/unimpressive growth (he was a teenager at the time, didn't really register how fucked up the business was). Medium-sized ventures in this space raked in several million and the largest were definitely bringing in tens of millions of dollars. I know at some point there were concerns of money laundering...

Playtika just IPO'd for 12B and they seem to mostly make gambling apps. I've seen people play them on planes and it's slightly disturbing. I took an SF -> Miami redeye once and a lady seemingly played it during the entire flight.

smhost• 5 years ago

sports betting was legalized in 2018 (https://en.wikipedia.org/wiki/Murphy_v._National_Collegiate_...)

armadsen• 5 years ago

I’m in Southern Africa right now and was watching the Olympics on local TV and noticed the same thing. Some commercial breaks consisted of nothing but back to back ads for the same local-market (ie. southern African) sports betting app. It was weird.

autokad• 5 years ago

I remember Jim Cramer on CNBC saying he wouldn't recommend fossil fuel, gun, and cigarette companies because of ethical reasons. then he went on to push one of those gambling companies, who on his show said it was their goal to get every family in America gambling on their platform.

I'm like, you said that? are you trying to get banned?

bostonsre• 5 years ago

You watched real tv on your computer or real tv/cable tv? If on your computer... maybe jeaopardy viewers are more likely to gamble? I don't recall seeing any gambling commercials while watching the olympics on hulu live tv (am on the live tv and no ads bundle which for some reason includes lots of ads).

Sebguer• 5 years ago

If you look at Twitch there are plenty of big streamers spending their times on websites like Stake which is literally just an unregulated BTC casino.

heavyset_go• 5 years ago

I've been getting a lot of gambling related ads from Google on YouTube, which is a bad look for an advertising company. Why can't Google find clients that run legitimate businesses?

555552• 5 years ago

Interesting. Can you name some of the apps you've been seeing advertised?

robarr• 5 years ago

It seems to be a global trend in countries where there is not proper legislation or heavy lobbying . In my country this has been happening the last four of five years and now the national football cup is now called the betsson cup and all along the matches the commentators refers to the odds and how easy it is to bet using only the app. There is a bet to make on much more than who wins and who looses: spread, number of fouls and types of plays per player and per team, and so on. There was even the chance to bet on the latest presidential election.

hnick2• 5 years ago

Problem here in Australia too.

TV aside, there has been some drama over this on Twitch. Streamers are shown gambling massive (to you or me) amounts of money daily. Kids watch this. It's entirely unregulated (maybe not in theory, but in practice). Some people have done investigations into the companies and they seem very shady. There's absolutely no reason to believe these companies aren't directly supporting or sponsoring the streamers monetarily, or even tweaking the numbers behind the scenes to make them lucky. It's been alleged for gacha games in the past, and I definitely believe people will go further for real money if they can.

usaar3332• 5 years ago

Alibaba and Tencent are hardly purely "get people addicted" companies.

Together, they power nearly the entire retail transaction market in China. Alibaba heavily drives commercial transactions and Tencent powers the vast amount of personal communication (WeChat).

They are quite profitable as effective monopolies, but are very valuable to society.

will4274• 5 years ago

Facebook and Netflix are excellent examples of companies that contribute greatly to our GDP whilst simultaneously draining our reserves of actual capital and mental health.

It's not so clear to me that this is true. The fundamental question is - if not this, then what? If you accept that people can only work a certain amount, then a "perfectly" "productive" society involves people working just that amount, and then going home and entertaining themselves the amount that is necessary to recharge, safely, and then repeating. If not Netflix, then what? Alcohol and drunk driving?

I'm not saying watching Netflix is what we should aspire to, but compared to the alternatives, it seems reasonably likely to contribute to economic growth. A passive workforce works.

triceratops8• 5 years ago

Facebook, sure. Why Netflix? TV and movies have always been around. The US owes its status as a cultural superpower to Hollywood. Too much TV and movie-watching isn't good for a nation, sure, but you could make that argument about any pastime.

74d-fe6-2c62• 5 years ago

Communication has also been always around. The problem is the abundance - same with fat and sugar and cocaine. A little is fine, a lot is bad.

mc327• 5 years ago

Netflix provides on-demand all you can view content. It doesn’t require any “cooling period” before the next episode. You don’t have to engage with family, friends or work. You can stream all day and live in fantasyland.

jefftechentin• 5 years ago

Not sure how valid but I think a case from this hypothesized Chinese Government perspective can be made even without criticizing Netflix itself.

When Hollywood was built in the 1920's it was not exactly the backbone of the economy. The article argues that the Chinese Government sees value in the economy beyond GDP goes up and cash flows good. Technology and manufacturing are important to national security.

The article quote Xi Jinping saying “we must recognize the fundamental importance of the real economy… and never deindustrialize.” I guess the national question for the other super power is how important is this "real economy" to itself. Is too much talent and labor sucked up in profitable activity that is suboptimal for a nation? Are these 21st century company's like Netflix good enough for our nation?

crossroadsguy• 5 years ago

Netflix has one of darkest UX patterns hidden in plain sight. Or not even hidden maybe.

itmayno5• 5 years ago

The native citizens will come to HN and offer some rationalization. The non citizens will offer others. The reason is very simple. The dictator is paranoid about losing control and getting killed. Simple as that.

Long version: when you are facing internal party conflicts, alliance between US-UK-Japan-Australia-India-Taiwan-South Korea-EU which accounts for 90% of worlds wealth and war power 10x the magnitude and is against you, floods that gets worse every year, extreme heatwave that will eventually make Shanghai unlivable, delta Covid lockdowns, capital flight, demographic crisis, supply chain moving out, internal resistance from Hong Kong and tibet and xinjiang, and young generation lying flat. You are paranoid as hell and afraid to lose control so as to not get killed.

dash24• 5 years ago

This is the basic story that Acemoglu and Robinson tell: ultimately, inclusive political institutions (their rather fluffy term for liberal democracy) will win because they allow for creative destruction and renewal in the economy. Dictatorship never creates lasting economic growth, because the dictator is supported by the status quo elites, who eventually become dinosaurs.

I'm not sure I believe it, but it's a bold prediction and worth thinking about.

lasagnaphil7• 5 years ago

And the alliance countries you've listed are also suffering from those exact same problems (climate change, Covid lockdowns, capital flight, demographic crisis, deindustrialization, widespread unrest, a hopeless young generation). And debatably, some of them have much worse on some fronts than China.

I do think that every country in this world, whether it be the US, China, or my country, are experiencing the same effects from the current configuration of global capitalism (environmental destruction, extreme inequality, housing crisis, cutthroat job competition, long working hours, alienation, depression), and the only thing it's different is how state governments are responding to the crisis. Out of all the governments in the world, China seems ahead of some Western countries in a few aspects (as a one-party state being able to control and crack down on a lot of things and enable strict policies against over-financialization and deindustrialization). However, I still do think that China's strong state measures are only a stopgap measure for the more fundamental political and philosophical problems that the entire world has right now.

desert_boi2• 5 years ago

Not quite the https://en.wikipedia.org/wiki/Eight-Nation_Alliance.

mc327• 5 years ago

It would be quite interesting to see a cleaving between us in the “West” and those who follow China’s model.

I can see the disadvantage of the saccharine part of our economy and the advantages of focusing on nuts and bolts.

It’s the difference between letting people decide what’s right for them and having a more planned society. Obviously planned societies have been a recurring theme in history, most notably socialism and its chronological counterpart national socialism. Neither made good faith efforts and both resulted in millions of deaths. But we also experienced unnecessary deaths from unregulated parts of the economy, though not as many deaths and at least it involved more free will.

vikiomega93• 5 years ago

One idea that seems to make sense to me is that social mobility is the equivalent of starvation in a socialist setup. What we see today with the poorer sections of society especially African Americans is a strong indicator that all systems of power should be viewed critically and with compassion. The vast majority of the poor in America for example are obese and that's one cost I can think of that we pay for the current system. Btw, I'm not saying poverty is the cause, just that the system is setup to maximize free market outcomes that are not good but we put up with them, https://www.washingtonpost.com/lifestyle/food/the-true-conne...

cryptica• 5 years ago

I was thinking along the same lines so it's interesting to see that others have come to the same conclusion.

IMO, large parts of the tech industry are artificial and fueled entirely by monetary policy.

If reserve banks in the west stopped expanding the money supply, large parts of the tech industry would be wiped out; they would quickly be revealed as negative-value industries.

With limited autonomy over their own global monetary policies, this was the only way China could fix this problem.

danjac• 5 years ago

I'll bet you could pick up a random op-ed from a 1960s Readers' Digest and someone would be making the argument that Americans spend too much time watching TV and pouring their creative energies into advertising, cosmetics and pop records while the Soviets are conquering outer space and South East Asia.

Apocryphon4• 5 years ago

And at least back then you could point to statistical trends indicating that American poverty, income inequality, and standard of living were all trending in a desirable trajectory.

Also, the moon landing.

jszymborski2• 5 years ago

Yah, there is this incomprehensible gnawing notion that crushing oppression is somehow a great way to innovate, and that liberty and self-expression is no more than dalliance.

ethanbond• 5 years ago

Thankfully our competition at the time were agricultural societies LARPing as industrial ones and then a big pile of ruins in Europe.

Not so today

throw_m239339• 5 years ago

The big difference here is that US manufacturing didn't over rely on the soviet back then, nor where they massively buying US bonds...

What's the equivalent of Shenzen in US?

rakmos2• 5 years ago

You missed the giant gaping time sink that is the video game industry.

I also think including this in the discussion will, perhaps, emphasize the nuance of what I believe you're indirectly referencing -- the economics of how humans choose to spend their time (sometimes referred to as the "Attention Economy").

I believe literally optimizing for something such as GDP fails to take into account freedom / liberty which is likely something most on this website would agree is incredibly valuable in a society.

I think the difficulty is in creating a consensus around what is acceptable relative to the "Attention Economy". It might even be impossible given that this seems almost indistinguishable from culture -- and there will likely never be a single unified culture if and until something as paradigm-shifting as a multi-planetary species is realized.

thedudeabides5• 5 years ago

I dunno man, you ever seen the genZs play fornite? Not sure it's a waste of time so much as training for some weird future in the computer

https://www.youtube.com/watch?v=GKd2KpGkFJ4

pm902• 5 years ago

The video game industry is one of the key factors to the success of the US technology industry. Some of the most innovative software is written by game developers. As we move into a future where AR/VR and digital worlds will become commerce hubs, the US is arguably incredibly well set up to take advantage of it.

Video game bashing seems like another moral panic to me. People are spending more time playing video games than slaving away flipping burgers. So what?

dash24• 5 years ago

Freemarket choices of what to spend money on can certainly have problems. It'd be bold to assume that the dictator's choices will be better for their people, though. The USSR spent its money on tanks: https://blogs.warwick.ac.uk/markharrison/entry/the_soviet_ec.... Will China be different? Or sometimes, are tanks the right choice? Let's hope not.

AlwaysRock• 5 years ago

I understand the facebook hate but is netflix included here because its... entertainment? I guess we should get rid of the arts as a whole.

dufdudh• 5 years ago

I don't know how to tell you this but all of the things you listed are fine and wildly common both in China and SEA in general. I'm not sure if you were just attacking social media at large but that too is wildly popular. Facebook can only dream of having the social integration that Weechat enjoys.

mountainb2• 5 years ago

China produces more steel in a month than the US does in an entire year of all types. US steel production is around 7% of Chinese steel production. Could the US ramp up steel production etc. on a crash basis under war conditions? Yes, but the overall picture is not great, given that China could also ramp up its production under the same constraints.

onepointsixC• 5 years ago

China could not ramp up steel production because it imports the raw materials from far away, mostly from Australia. Most of the raw materials, including energy and even food are imported into China. None of those supply chains would be left untouched in a war.

thehappypm• 5 years ago

Is it so impressive when you consider that the US has a population of about 20% China's? It's just one sector, of many many.

vikiomega93• 5 years ago

Indeed, one of the more interesting ideas I've been considering is how does society think about the delayed effects on mental health and attention deficit. For example, one might argue maybe Netflix is easier to moderate at the level of a family or community, like having parental locks on time spent on quality content. But what do you do with Internet Porn? There is enough evidence that novelty stimulation has detrimental effects. For either scenario, the internet has made it easier to consume more and at a faster rate, but we don't have a quick and easy mechanism to talk about these things and develop cultural practices. One of the more interesting ideas for me is finding that balance between liberal individual right to choice and recognizing all systems including human society is a feedback loop and drifts into failure (either expanding freedoms or curbing them).

powerapple• 5 years ago

Some personal opinion here: top Chinese internet companies makes most their money domestically, the top US companies are real international companies, and Facebook makes $5 billion of ad money from China, can you imagine that? It is other countries are losing money because their users contribute to the success of Facebook, YouTube but they are not making enough tax revenue from it. All these like economy is not good for society, but the situation is different in US than China.

aoleinik• 5 years ago

Out of curiosity, what _should_ the US be working on? The only two things I can think of that really needs more man hours is space travel and quantum computing, but those fields are generally far from being revenue generating and require mountains of initial investment.

I agree that ad tech and social media are net negatives, but what are the alternatives? A dead economy, where most of the money circulates on necessities?

Not asking this sarcastically or rhetorically - genuinely want some good insight on what people who say the current direction of the US is poor think the direction should be.

dnautics• 5 years ago

To some degrees with those two things if you do it wrong, "just adding man hours" to those endeavors can slow progress, not accelerate it

TylerLives• 5 years ago

Medicine, robotics, social media that improves people's lives, maybe fix universities (or create an alternative. You can learn a lot on the internet, but social aspect of it can be improved), ...

axelroze2• 5 years ago

Reorganization of work so that there are not many bullshit jobs => 15 hour work weeks for any knowledge work. The other time the people can work on something else and/or read about science and philosophy. A truly efficient society does not have people wasting time copy pasting stuff between Excel sheets. Eventually all work will become knowledge work through automation and robotic development brought by the new generation of critical-thinkers.

Removal of free (costless) social media. Everyone who uses social media must pay for the employee and hardware costs by the minute. End of ads and end of engagement. End of push notifications. If people gain time by working 15 hours a week but lose the gained time on social media then no good is created. There is some value in Social Media but it must be consumed a little otherwise it is poison. Similar for Netflix and TV.

Once people are free of bullshit work and of bullshit free time (facebook and instagram feeds) and all boring physical work is automated, we should look to the stars. The final frontier.

That is my hopefully doable utopia. Actually this is John Maynard Keynes year 2000 utopia expanded a bit. Society failed as we are 2021 now and 996 is the norm instead of 15 hour work weeks. Working more is not the solution. Working smart is. Also not everyone needs to have a job.

refurb2• 5 years ago

Facebook is a negligible part of the US GDP. And Netflix is not value ad? Maybe not for you.

But regardless, China's downfall will be the fact it tries and picks to "winners and losers". It's a semi-planned economy. Many other countries have tried this and I'm not saying that China will collapse or won't continue to be an economic power, but even the mighty power of the CCP won't make consumers buy their products from you if they aren't what consumers want.

fennecfoxy3• 5 years ago

Lol, you write as if you've never heard of Tencent, who makes incredibly addictive time-wasting games for the Chinese market (and others) very much akin to your "negative value add activities", so much so that they're now using face recognition to prevent addicted children from playing (they don't care, really) and also producing such games as "Clap for Xi Jinping"...like, that has to be a joke, right? Right?

faeriechangling• 5 years ago

What I notice is that the most productive efforts of big tech are seemingly quick to be abandoned side projects. The real money is in adtech with is 90% zero-sum and 10% happily marrying the right companies with the right customers.

I don't really see Netflix as being as much of a problem compared to other "attention" companies because they screwed with the media cartels, have fantastic infrastructure, mostly sell long-form content, and denormalized ad-breaks. Compare to YouTube or TikTok.

duxup2• 5 years ago

Seems like this is just a typical kleptocracy or some authoritarian type system at work where ultimately if it doesn't benefit those in power it has a higher risk of running into trouble when someone is seen as a possible threat / or simply because it is convenient to make room for something those in power support.

saiya-jin• 5 years ago

I don't think they are smashing tech industry per se, just those in it who grew bold enough they thought they can actually do/say what they want, and not remain forever in servitude to those wielding real power.

Be a good boy and stay a good boy and you shall be rewarded, at least domestically. This doesn't foster international success so easily but that's another story.

toss13• 5 years ago

The Western financial elites thought they were exploiting cheap Chinese labor by promoting outsourcing of manufacturing - it would make for far greater profits.

Meanwhile the Chinese were exploiting the West's myopic focus on quarterly profits to gain access to and experience in fabricating and designing the top western technology.

The scale of this strategic blunder by the Western societies will be considered of historic importance.

The analysis in this article brings that into focus as well as anything I've yet seen. If the West does not rapidly regain focus on the things that matter -- real manufacturing, engineering, and AI (not consumerist opiates for the masses) -- we are soooo screwed.

clydethefrog• 5 years ago

Taking a quick look at the YC S21 offering that is posted here - it seems all this capital is still mostly based on software that stimulates more consuming.

toss13• 5 years ago

Yup, consume now, profit some this quarter. Nevermind putting in the effort to invent new technologies that could profit and dominate for decades.

It is exactly the myopic financialist's approach. It works great for a while, juicing artificial growth. Meanwhile it starves the real growth engines, so when it stops working, there is no hope of recovery before failure (but the finance wizards have by then moved on).

Normally this applies at the scale of companies, but here it applies on the scale of nations or societies.

Ignore at our peril.

orky56• 5 years ago

Startup seeks to raise funding or generate profits as quickly as possible -> VCs invest and hope for 50x return within 10 years -> Liquidity event may take startup public where they focus on quarterly profit

This is a system of private funding that generates maximum profits within a 5-10 year horizon while China and its public funding and actions is focusing on generating foundational returns and innovation that will last well beyond that 10 year horizon. The US approach of subsidies for loss leaders and laissez faire when it comes to regulation is kicking the can and optimized to pump out millionares/billionaires that can provide outsized returns to people in the market (employees/founders/congress/entrepreneurs) but less for people on the sideline.

nemo44x2• 5 years ago

The analysis in this article brings that into focus as well as anything I've yet seen. If the West does not rapidly regain focus on the things that matter -- real manufacturing, engineering, and AI (not consumerist opiates for the masses) -- we are soooo screwed.

When China can build a decent airplane then I'll be interested. Until then, they produce/replicate relatively simple tech and for whatever massive scale they have in their manufacturing, they lack sophistication and complexity in many ways. They're doing their thing and doing it well but they don't produce sophisticated, leading edge things or processes for the most part.

The USA has never manufactured more than it does today. Don't confuse manufacturing labor force size with outputs. High tech manufacturing in the USA leads the world by a significant margin today. Much of what China is manufacturing is considered routine and trivial.

toss13• 5 years ago

Excellent points, about leadership in innovation - there are many ways in which the West still leads, and in many ways China is still merely a copycat - e.g., note how critical China sees it to get access to the tech and local ownership.

But, China is advancing, making some genuine homegrown breakthroughs and is certainly much further along the learning curve than the West in many areas such as solar panels.

Mostly, it is key to note that China recognizes this, has a long term strategic plan and is executing on the plan.

Unless we make appropriate structural & strategic changes, at the very least, treating a far wider swath of tech as sufficiently strategic to require development & production at home or among allied countries, we are on a slippery slope.

Edit: Plus, by the time we see them making stuff as good or better than in the West, it will be too late to catch up. Those growth curves tend to be exponential (compound interest on knowledge gains, network effects of multiple experts or multipl6field leadership, etc.).

FL33TW00D• 5 years ago

At what point do individual freedoms / economic freedoms (eg starting a company that builds addictive non-productive platforms) inhibit human progress? Perhaps China is right on this one.

nobody0• 5 years ago

More like smashing FAANG-like hegemony and K-12 riddle-solving army bootcamps.

Given Internet companies are ubiquitous, we sort of equate tech firms to them...

ilamont• 5 years ago

I believe we're seeing yet another example of an ossified and hierarchal Chinese Communist Party struggling to maintain control over real or imagined internal threats.

Under the CCP, the "rights" pendulum swings wildly for society and the economy, alternating between openness and crackdowns. Some policies seem well thought out, and then you have edicts which seem impulsive and extreme with little regard to long-term consequences or the impact on China's people.

100 flowers/Great Leap Forward.

Cultural Revolution/Deng reforms.

Tiananmen/hypernationalism.

Tech has enjoyed a relatively open hand for two decades. Now the fist is closed and comes smashing down.

zwieback• 5 years ago

I also think this much simpler explanation is at least worth considering.

volta832• 5 years ago

There are certainly those in America who believe that Facebook and Google produce little of value relative to the profit they rake in; maybe China’s leaders, for reasons that will remain forever opaque to us, have simply reached the same conclusion.

Arguably, capturing most of your country's top talent with absurd salaries and putting them to work on world-critical challenges like... how to generate more revenue from advertisement or... how to create as many "phone-addicts" as possible... could be quantified as producing tons and tons of negative value.

If China's crackdown on "consumer-facing tech" is about this, that could be a very good thing for China long term.

I grew up wanting to work on NASA and putting stuff on space, and during university got offered 10x the NASA salaries at FAANG companies, and was to week to just say "no thanks".

10 years later I am starting to wonder what my legacy is going to be.

atom_arranger• 5 years ago

I have a similar experience. I grew up wanting to work in robotics but found pure software work to be as enjoyable (maybe not as "meaningful", but as enjoyable), and much more lucrative.

Not sure why coding CRUD pays so much more than what robotics tends to. I guess there's more material costs, costs to get a company started and profitable could be higher.

f00zz• 5 years ago

"That's just from EU consumers, never mind the rest of the world - spending so much on mobile netlink that companies can clear more than thirty billion in profit, in profit alone, over two years. Think of the gross! So you tell me - is that the best way of spending humanity's money, webbing friends, playing games on the bus? A fraction of a single percent of that money, we could have bases on Mars in five years. Destiny - possibility - glorious - but, no, we'll keep frittering our money on games, on cosmetics, on flim-flam, and we'll turn round in five hundred years and still be right here where we are now."

- from Adam Roberts' sci-fi novel "Gradisil"

dematz2• 5 years ago

I mean, I can see the point. Maybe facebook is getting money but not actually creating value for people.

...but if we get Mars bases, so what? I'd rather play video games on earth than farm potatoes on Mars. Call it a lack of imagination but yeah.

jszymborski2• 5 years ago

Another comment mentioned this, but I think Tencent and Alibaba are poor stand-ins for the sort of companies that aim to make phone-addicts.

nemo44x2• 5 years ago

10 years later I am starting to wonder what my legacy is going to be.

Isn't this a major reason people start families? Having kids and people and things to take care of gives life a lot of meaning to many people. So much so that the vapid trivialities of the everyday modern life are mere amusements we gratefully accept rather than the daily struggle most people that ever lived before us had to endure.

closeparen• 5 years ago

I think some zero-autonomy zero-respect enterprise IT drudgery is more likely than the space program, if we didn’t have access to these “absurd” wages. Which are, coincidentally, just about enough to own homes for our families within range of our offices.

adventured5• 5 years ago

Arguably, capturing most of your country's top talent with absurd salaries and putting them to work on world-critical challenges like... how to generate more revenue from advertisement or... how to create as many "phone-addicts" as possible... could be quantified as producing tons and tons of negative value.

And where is that happening? It's not happening in the US, China or Europe. The ad tech segment would be lucky to rank at the median on talent in the tech industry, much less the wider economy.

What you're referring to is a myth, a slander that gets thrown around HN freely because it makes for a great, vicious soundbite to stab (primarily) the US with. It always goes entirely unsupported, nobody dares to even try to support the claim (because it's obviously false and won't stand up to even light scrutiny).

The majority of the top US talent is working on ad tech? No, that's not actually happening. Not remotely close. The claim is off by far more than an order of magnitude. The best talent at Google are not even working on ad tech.

Pfizer, Merck, Amgen, Regeneron, Moderna, Biogen, Gilead, AbbVie, Abbott, Bristol-Myers, Eli Lilly, Illumina, Intuitive Surgical, Apple, Microsoft, Adobe, Nvidia, Intel, AMD, Texas Instruments, Cisco, Qualcomm, Micron, LAM, KLA, Applied Materials, SpaceX, Tesla, Caterpillar, Honeywell, DuPont, General Dynamics, Lockheed, Northrop, Boeing, 3M, Boston Scientific, Stryker, Edwards Lifesciences, Johnson & Johnson, Medtronic, Monsanto.

That's a super short list that instantly destroys the claim and doesn't include the vast brilliance at work in US universities (which also outweighs the entire US ad tech industry all by itself). It also excludes the huge number of foreign industrial firms in the US filled full of brilliant persons that are also not concerned with ad tech.

NASA has more elite minds in its employment than all of the US ad tech industry combined.

There are probably more top minds working on just CRISPR right now in the US than in the entire ad tech field. Which is to say, the position of the ad tech field is drastically overstated.

IBM is a debased giant, that has languished badly. And yet they have a top shelf quantum computing division. You think the best talent at IBM is working on ad tech? No.

TI or Cisco's best talent is all dedicated to ad tech? No.

The best engineering minds at Illinois Tool Works or John Deere, they're all working on ad tech? No.

All the smartest minds at LAM, KLA and Applied Materials are working on ad tech? No.

The great engineers at Nvidia, AMD, SpaceX or Caterpillar, they're all working on ad tech? Uh, no.

The insurance industry has more top talent than the ad tech industry. The property/casualty segment all by itself is dramatically larger than the entire ad tech field, including all dollars spent on digital advertising in the US.

Compensation != top talent. Otherwise all the smartest people in the world would be hedge fund managers and absolutely nobody would ever work for NASA or NSA. That's not actually how things work in reality.

yostrovs• 5 years ago

I know of a number of people that received PhDs in physics, who would have become proper scientists, that instead went to work for investment firms because they can do the math and know how to code. After a decade of student poverty, getting a $150,000 salary did amazing things to their minds and their inspirations. Not all have done this, but many have for sure, and this has caused a brain drain.

volta832• 5 years ago

It's not happening in the US, China or Europe. T

In Germany, Google, Apple, Facebook and Amazon compete for CS, electrical, and mech eng students with BMW, Daimler, Audi, Airbus, etc.

These classical engineering companies can't compete with FAANG salaries here. The top of my class had offers from many of them, but they all ended up in FAANG, because the salaries were 2x what the others were offering, with larger room to grow.

The best talent at Google are not even working on ad tech.

Improving web server performance, source control tools, etc. at, e.g., Facebook, is not "working on ad-tech" per se, but rather work on the infrastructure that supports ad tech.

Arguably, working on "traffic in Google maps" is not working on "ad tech", but rather working on adding value to an app so that it can serve more ads, etc.

Pfizer, Merck, Amgen, Regeneron, Moderna, Biogen, Gilead, AbbVie, Abbott, Bristol-Myers, Eli Lilly, Illumina, Intuitive Surgical, Apple, Microsoft, Adobe, Nvidia, Intel, AMD, Texas Instruments, Cisco, Qualcomm, Micron, LAM, KLA, Applied Materials, SpaceX, Tesla, Caterpillar, Honeywell, DuPont, General Dynamics, Lockheed, Northrop, Boeing, 3M, Boston Scientific, Stryker, Edwards Lifesciences, Johnson & Johnson, Medtronic, Monsanto.

I work at FAANG. Many in my team are "aerospace engineer", "structural engineer", "civil engineer", "electrical engineer", "astrophysicist", "chemist", "mathematician", etc.. All top of their class, now doing CS, working "indirectly" on ad-tech.

That does not mean that the companies above fail to attract good engineers. But most people in my team, including myself, had to choose between working at any of the top firms for engineering in our "field", or going to FAANG to do CS and work (directly or indirectly) on ad tech.

One new hire recently was doubting between working here at FAANG or at SpaceX, and at the end, after being a bit burned out from their PhD, they decided they preferred to work at FAANG on ad-tech because: n-times more salary, for a fraction of the hours.

That's a super short list that instantly destroys the claim

The claim is that normal companies can't compete with FAANG for top talent.

I don't see how the fact that normal engineering companies can find engineers debunks that claim.

alexashka2• 5 years ago

Every passing minute is another chance to turn it all around - Vanilla Sky (the movie) :)

jorblumesea• 5 years ago

It might actually have the opposite effect. Working for a highly bureaucratic government run firm might not appeal to many entrepreneurs and engineers. The CCP is not exactly known for ideological flexibility or just outsider thinking in general. Imagine working for the government, and that's the main engineering opportunities you have. Imagine your only opportunities being huge multi year hard engineering projects.

There are many people who enjoy working in fast paced environments or building cutting edge experiences and products.

You could see the US brain drain top Chinese technical talent because the US has diversity of opportunity. There's Space X and Tesla, but also Uber and Google.

nbardy• 5 years ago

Stop being a coward today.

10 years at a FAANG take your money, quit

Study rocket science, photovoltaic cells.

Do something and do it now.

jeswin3• 5 years ago

Asia is headed towards war - it almost seems inevitable. Xi has publicly committed to not leaving Taiwan invasion to the next generation.

China is focused on building an industrial base that complements its military power while generating cash, and internet software startups aren't going to help.

For the rest of Asia, they'd do well to militarize; for Japan and Australia to consider getting nuclear weapons or hosting them, and for India to rapidly increase stockpiles.

deltasixeight5• 5 years ago

War is unlikely.

Globalization of all economies means everybody loses in a war. The devastation will harm everyone in a significant way.

The most likely outcome is just perpetual political squabbling and the continuous feeling that war is omnipresent but realistically will never occur.

China likely plans to dominate the US from a prestige standpoint. Better GDP, higher technology, that kind of thing and they already have the momentum for it.

I-M-S• 5 years ago

https://en.wikipedia.org/wiki/The_Great_Illusion

cyberpunk• 5 years ago

Can you elaborate on why you think it seems inevitable?

From my armchair, I can't see a benefit to China for kicking off a superpower war; they're already pulling ahead in STEM, their economy is fairly safe and not really that dependant on exports, quality of life is improving massively, infra is improving.. ?

jeswin3• 5 years ago

I don't mean imminent war, but that it's headed there. From articles in Chinese news sites, it seems Xi wants to attach reunification to his legacy. The thing with dictatorships is that ultimately it will depend on what one person wants to achieve.

Xi is of course not going to risk a war that he won't win easily. So there's enough time for the rest of the world to reverse the wholesale shift of industrial capacity into China.

Taiwan had nuclear program in the 70s which would have prevented war and invasion. That was nipped under pressure from everyone else, so I imho defending a democratic nation must be a shared responsibility.

paxys• 5 years ago

This is stupid. China is the last country in the world to want war, considering its 100% export-driven economy.

dotcommand3• 5 years ago

For the rest of Asia, they'd do well to militarize; for Japan and Australia to consider getting nuclear weapons or hosting them,

The idea that we'd ever let Japan have a nuke is ludicrous. Do you really think we'd let a country we nuked twice have such weapons? There is a reason why we are still occupying Japan 75+ years after ww2. And no, it isn't to "protect" japan.

and for India to rapidly increase stockpiles.

I don't think china would mind one bit. After all, it wasn't china that sanctioned india when they developed nukes...

http://edition.cnn.com/WORLD/asiapcf/9805/13/india.us/

If there is a war in asia, it will be a war for liberation - not from china, but from the west. It's so funny how we truly deluded ourselves into thinking we are the good guys in asia and not the murderous colonial powers that we truly are. We really need to start seeing the world as it is rather than the disneyfied nonsense you read on "news". Or we are in for a rude awakening.

jeswin3• 5 years ago

The idea that we'd ever let Japan have a nuke is ludicrous. Do you really think we'd let a country we nuked twice have such weapons?

Not ludicrous at all - Trump was open to Japan and Korea acquiring nukes. [1]

After all, it wasn't china that sanctioned india when they developed nukes...

That was at a time when India's wasn't clearly aligned to the US. Subsequently it was the US which drafted the Nuclear Suppliers Group (NSG) exemption for India.

If there is a war in asia, it will be a war for liberation - not from china, but from the west.

What liberation? People hold favorable views of the West (compared to China) in East Asia, South East Asia, or India. Many of them are now in disputes with China, which often involve violence. The situation is different in West Asia - but it's always been that way.

It's so funny how we truly deluded ourselves into thinking we are the good guys in asia and not the murderous colonial powers that we truly are.

Modern western influence is largely positive compared to the alternatives.

1: https://www.ft.com/content/c927017c-f398-11e5-9afe-dd2472ea2...

s1artibartfast• 5 years ago

Japan and the US are close allies based on common interests: Japan is one of the few countries that hates China more than the USA.

The people of Japan and the US have very favorable opinions of each other[1]. Of the two, Japan has more favorable views of the USA than the other way around.

The US would love to station nukes in Japan, but this would cross a red line for China.

https://www.pewresearch.org/global/2015/04/07/americans-japa...

https://www.pewresearch.org/global/2016/09/13/hostile-neighb...

ppeetteerr2• 5 years ago

China's investment into hard-tech (semiconductors, etc) doesn't not mean it can't also allow for the growth of consumer tech. For instance, we subsidize farming to keep it state-side but we don't prevent food processing companies from growing and consolidating.

Maybe the point here is that the government in china wants to always be between the consumer and the service, which makes a lot more sense. Maybe Alibaba and the like have a connection to every person and the gov'ment is threatened by that relationship.

There are many possibilities but I don't necessarily agree with the conclusion of the author: that to grow their hard-tech industry, they have to punish consumer tech.

japhib2• 5 years ago

doesn't not mean it can't also allow for the growth of consumer tech

I can't understand this sentence haha ... Too many "nots"

I don't necessarily agree with the conclusion of the author: that to grow their hard-tech industry, they have to punish consumer tech.

I don't think the author is trying to argue that this strategy is true -- I think they're just trying to explain China's behavior.

ppeetteerr2• 5 years ago

Not my finest post, I agree

citilife• 5 years ago

The U.S. has been in the process of delisting Chinese companies.

I personally suspect that China wanted to get a jump on the effort and in turn force U.S. pension & hedge funds to lose $400B.

https://www.wsj.com/articles/investors-rethink-china-bets-af...

That's a huge amount of money and will dramatically and negatively impact the public pension funds.

It's not about the tech, it's about the economic war between China and the United States. At the same time, the CCP is exerting it's authority over these companies to tighten it's control.

ffggvv• 5 years ago

a lot of chinese also hold baba and some of these stocks

avmich• 5 years ago

Hard to judge this approach. On one hand, spartan approach to economy of USSR after WWII allowed the growth of 1960-s. On the other hand, it also helped with the collapse of 1980-s. Maybe China's trying to take that into account.

I'd actually argue with the idea that China is doing this intentionally. Maybe it's not due to the centralized planning that tech sector gets smashed - maybe it's a much simpler reason behind that.

up_and_up• 5 years ago

How does this inspire founders to startup a company in China? Does this inspire me to invest more money in China?

johnnyApplePRNG• 5 years ago

I thought it was well known why Jack Ma/Ant were being crushed?

He spoke out against and essentially insulted the government in a speech last year, and immediately disappeared from the limelight. [0]

[0] https://entrepreneurshandbook.co/the-speech-that-cost-jack-m...

geodel• 5 years ago

Jack Ma was essentially engaging in payday loan type shady business. Being some kinda free speech warrior is western media POV.

fallingfrog• 5 years ago

Another perspective:

https://www.asiafinancial.com/china-seen-ushering-in-new-era...

granularity• 5 years ago

And of course you need firmware as well.

Love this. It's like Obama's "the bubble sort would be the wrong way to go". Clearly Mr Smith has done his homework on the subject of military technology and has learned a Technical Fact: "firmware exists". He probably even knows that it goes between hardware and software!

_4482• 5 years ago

The USA tech industry did start with hard-tech. The hint is in the name "Silicon Valley". The spur in innovation in the American tech industry started with companies working on projects from the defence and aerospace industry. Along the way they lost the plot, mostly during the dot-com bubble when the investment/banking/family-office industry(that does not understand tech) got heavily involved into it to make quick money! That diversion from hard-tech to click-bait tech has continued even today, because the investors want quick return whereas for hard-tech you have to have a lot of patience to see positive outcome.

One country that, to some extent, successfully emulated the early Silicon Valley type strategy is Israel that has encouraged lot of personnel from defence and aerospace industry to form commercial ventures.

Not many countries understand this point; many go by the PR bling that is spewed by the USA internet companies(mostly pushed by get-rich-quick minded VCs) and try to encourage this type of non-essential startups in the hope of being "successful similar to Silicon Valley". The definition of successful is obviously is being set by these get-rich-quick VCs rather than the country itself. It is not surprising that you see lot of the VCs/Accelerators/Incubators fund me-too type companies in other geographies in the hope that they will be acquired by companies in the US! It is all bait-and-switch game and not meant to develop R&D and innovation that benefits societies at large. Benefits to the society, if at all there is one, is the by-product or after-thought of this whole process.

ativzzz2• 5 years ago

It's much easier for Israel to justify investing into "hard" tech that accelerates military power because they are surrounded by ideological enemies and are perpetually at war.

lasagnaphil7• 5 years ago

It's illuminating (and equally harrowing) to see how much of the fundamental technology we have today has been researched and invented by the military (the Internet is one prime example), in stark contrast to the widespread belief among today's SV techies that free market innovation is what's driving the tech.

_4482• 5 years ago

Here is someone who is trying to spread this gospel of state led innovation for some time now:

https://www.economist.com/schumpeter/2014/02/03/startup-myth...

https://www.wired.co.uk/article/mariana-mazzucato

https://www.imf.org/external/pubs/ft/fandd/2020/09/economics...

https://www.economist.com/briefing/2021/01/16/the-case-for-m...

https://marianamazzucato.com

cbHXBY1D• 5 years ago

I'll never forget how an employee at a Silicon Valley VC tried to dissuade me from joining Microsoft Research because MSFT wasn't "really a 'tech' company." According to the VC, examples of tech companies were Airbnb or the million "Uber for X".

Gollapalli• 5 years ago

This probably isn't a popular opinion, but I think China may be genuinely right here. Innovation requires solving genuinely hard technical problems. Consumer Internet is, in general, not that.

I genuinely hope that America makes a similar shift in it's own VC sector.

fma• 5 years ago

Haven't read the article - but this is my sentiment for many years. I went to undergrad for computer engineering, then a masters in electrical engineering...hoping to do actual engineering work. And I end up having a career in web app development because that's where the money is at.

I am surprised that those who continue to work on "genuinely hard technical problems" do so when web app/dev has so many jobs with pretty damn good pay.

As an anecdote, my wife has a PhD in chemistry from a top program. Majority of her peers in grad school ended up taking classes in CS, Data Science, drop their program and work at a tech company.

When she graduated...I remember sitting with her at a career website and just looking at the differences in quantity of jobs for hard sciences vs IT (my wife's career now has nothing w/ her hard earned degree)

salt-thrower• 5 years ago

You can broaden that statement and say that almost all the CRUD-app bullshit which devs get employed for these days isn't that, either. I've worked as a dev for insurance, B2B fintech, and athletic wear companies. They're all doing trivial CRUD problems behind the scenes, where the only real challenge is dealing with asinine management and organizational issues.

And even if the consumer internet problems are technically challenging, like problems of scale for Facebook, you can argue pretty easily that solving them to increase Facebook's power and profitability is a net negative for society.

For China to simply say "no" to that and invest more heavily in the physical economy is... a smart move, by my estimation. It tracks with what I'd do in my "king for a day" fantasy. Not that I think they're out there building a utopia - they're still a repressive regime - but they're wisely avoiding a class of problems that the West has jumped into headfirst.

ajmurmann• 5 years ago

In discussions like this people will always call out how our smartest minds are being wasted on serving advertisements. While I despise advertisements and the economy around it, I wonder how accurate that assertion actually is.

So much of the work done at Google and Facebook seems to be solving general computing problems. That's how we got things like React and k8s that aren't specific to advertisements at all. On top we constantly complain about app the projects cancelled by Google. All these projects were build by someone and rarely are directly related to serving advertisements. Not to mention all the very valuable products provided by Google many of us use every day that provide tremendous value despite Google's ultimate goal of serving ads. Gmail, Maps, Docs, Calendar, YouTube, Google Voice and probably many more. Not to mention products we ridicule for their unnecessary changes and internal competitors like Meet/Hangouts. Pie on the sky stuff like self driving cars. AI advancements like Tensor flow. They have a leading security project that slowed down all out CPUs ;)

What percentage of work at Google is in fact directly "wasted" on advertisements?

DamnYuppie• 5 years ago

China saw how the tech companies in the USA have too much power to influence conversations. They want no part of that, they want absolute control and if they have to destroy part of their economy to make sure it happens then so be it.

celeritascelery• 5 years ago

I don’t get it. Why wouldn’t you just put them under your control? Now you have all that power.

Animats3• 5 years ago

China is not "smashing its tech industry". It's cracking down on private Internet companies that acquired too much power through network effects. This is completely consistent with CCP doctrine. Anything that central has to be state-owned.

Xi declared this year that while digitization is important, “we must recognize the fundamental importance of the real economy… and never deindustrialize.” Right. China, remember, has a national industrial policy. It's expressed in the national 5 year plan, which is taken seriously and used to set priorities.

What those priorities are is no secret. The current 5 year plan, the 14th, lists them.[1] Specific technology goals are in blue boxes. Semiconductors, gas turbines, biotech, new energy vehicles, robotics, advanced agricultural equipment. Internet services are mentioned in the Plan. One key line section out here: "We will strengthen the economic supervision of internet platforms in accordance with laws and regulations, clarify platform enterprise positioning and regulatory rules, improve the laws and regulations concerning the identification of monopolies, and crack down on monopolies and unfair competition. ... We will intensify anti-monopoly and anti-unfair competition law enforcement and judicial efforts and prevent the disorderly expansion of capital."

If you think this isn't to be taken seriously, go back and look at the 13th 5 year plan and check off the completed items.

[1] https://cset.georgetown.edu/wp-content/uploads/t0284_14th_Fi...

lasagnaphil7• 5 years ago

Maybe the headline's a bit misleading, but what you're saying is almost exactly what the article is talking about. (The article immediately refutes the notion of "smashing its tech industry" right away)

xchaotic• 5 years ago

but they're 'smashing' the likes of Ant Financial who were doing predatory, unsecured lending on an unprecedented scale. So IMO the thesis of smashing 'Internet' companies is incorrect - they're just making sure economy doesn't go into bubble territory (lending fuels spending) and the likes of Jack Ma, who are detached from the party don't get too much power/money.

polote• 5 years ago

Maybe the headline's a bit misleading

Nah, a lot of people just don't read the articles before commenting, whether it is on HN or anywhere else

ZeroGravitas• 5 years ago

The article is mostly weird kremlinology of what the chinese leadership are up to. Which seems unnecessary if they're widely publishing 5 year plans that tell you what they're doing.

Similar to Tesla's secret plan to produce cheaper and cheaper vehicles at larger scale, the boring truth isn't a big click winner.

majormajor2• 5 years ago

“we must recognize the fundamental importance of the real economy… and never deindustrialize.”

This hasn't been really put to the test yet, has it? What's the cost of labor delta compared to the places where outsourcing from China would be attractive currently?

Theodores• 5 years ago

In the West the accounting means you can't invest in robots that take years to pay for themselves. It is therefore more profitable to outsource and not have the capital investment on the books.

The Germans do it differently and can get a better return investing in themselves.

In China they have invested heavily in the robots that make the robots. Sure they are playing catch up in some areas, for instance, chips where they don't have a TSMC yet.

Even farming, where do those green and yellow tractors go? Cotton picking in China.

Some China tech is way ahead of the rest of the world. The difficulty of competing is getting really hard hence sanctions against Huawei. They had got 5G and The West didn't even know what it was for.

We have seen it before, Japan was way ahead with electronics and commodity cars. But China has a vast internal market and can proceed without making cheap goods for the West. If Western companies want to outsource to Burkina Faso then fine.

Also into the mix is that Chinese brands are desirable in China and increasingly abroad. China has barely got started.

adventured5• 5 years ago

This hasn't been really put to the test yet, has it?

Yes. Their textile industry has been gradually leaving for much of the past decade, as cheaper production exists in several other countries at this point. Textile dominance by China peaked around 10-15 years ago. They will lose labor cost sensitive industries to their cheaper competitors as their economy continues to climb, as labor costs continue to climb. It took many decades for the US textile industry - the world's largest for a while in the 20th century - to be worn down by this same process. During the first 2/3 of the 20th century the US was often a leader in inventing new textile technology and manufacturing processes. Toward the waning days many US textile makers tried to modernize and or consolidate their domestic operations as a competitive advantage, it didn't stop the process. Most sent their manufacturing overseas ultimately. China is currently attempting to modernize, reduce labor in the manufacturing process, and that also won't stop the industry from leaving. Textiles are one of the first major industries that tend to leave due to being particularly labor cost sensitivity.

China is still the world's largest textile exporter, and may retain that crown for a long time yet given their size. A large chunk of their market share is going to be gradually dispersed across two dozen other nations.

Vietnam for example became the largest textile exporter to the US in 2019 (pre pandemic), overtaking China. Vietnam's GDP per capita is $3,600 versus $11,800 for China. Vietnam is in the position that China was 15 years ago in that regard. China will struggle to compete with labor that costs 1/2 or 1/3 what theirs does.

lasagnaphil7• 5 years ago

I think that's the hubris China is currently having: as they've grown stricly because of the reliance of export-led growth, they are now dependent on the global economic order as much as the US is (for its import-led growth). And the ones that initially built the factories in China, can always pack up and move to a different country. So global corporations are now kind of "cycling through" a list of alternate underdeveloped countries to build factories in, and keep going until the options are all exhausted. Some countries are quite receptive to this (like Vietnam, which is undergoing a similar transformation like South Korea and China had in the past), but some countries are not (like India, due to its complex cultural/political legacy it's hard for foreign companies to navigate through).

itmayno5• 5 years ago

“ It's cracking down on private Internet companies that acquired too much power through network effects.”

Sounds like smashing to me. Smashing down on private companies and innovations. Smashing down on private wealth and power. Smashing down on freedom and growth. You can tell the dictator is getting desperate if he stops the train of innovation.

mcguire2• 5 years ago

That makes the assumption that "innovation" is consumer facing internet technology.

muyuu• 5 years ago

Chinese mandarins don't believe all innovation is the same, and they also believe some of it may be deallocating capital from industry that brings capital influx into the country.

It's totally consistent with their long term plans since the 90s or so.

endymi0n• 5 years ago

Wow, it‘s actually public… in hindsight, I should probably not be surprised, but it has the same eery feel to me like when I learned that Hitler had actually written down all of his plans around eradicating Jews and Germanic world dominance in his book „Mein Kampf“ a decade before he put it into reality — it was just that nobody took it seriously since they thought he was a lunatic.

Maybe it‘s about time to read the Chinese 5 year plans in depth.

mrkramer2• 5 years ago

Yea Hitler wrote in Mein Kampf that he hated Jews and Communism so it should've been taken very seriously since a person like him(German nationalist and fanatic) became a chancellor. I don't who expected different behavior than what was written in Mein Kampf. Holocaust and WW2 War could've been prevented if Allies(US, UK and France) invaded Germany in 1933-1939 time period. But they expected Hitler to be European shield against Communism and geo-politic partner.

hunglee2• 5 years ago

https://www.chinalawtranslate.com/ - does a pretty good job of translation of Chinese law. Another part of the problem is the language barrier - not many China commentators in media mainstream actually understand Mandarin or read Chinese - and end up recycling the interpretations of the very few that can

vikiomega93• 5 years ago

I'm still reading up so looking for resources. What's a good introduction that talks about how the Chinese state is looking at individual choices? 5 year planning makes sense but the implementation is key (India for example had similar planning processes). Is there writing on how Xi or the CCP thinks about incorrect choices in the planning or a fail-safe that prevents what happened to the Soviet Union? Have they ever talked about getting things wrong?

estaseuropano• 5 years ago

Basically, its just antitrust which for a decade or two has not really been enforced in the US, which in turn might be a reason for many of the ills we see in economy and society today.

telxos3• 5 years ago

Great point.

Even to take it down a notch, what has happened in the US is just boring. You almost can't have a conversation without one of 5 of the same companies coming up.

hintymad2• 5 years ago

I think you're spot on, and the author's assessment is accurate: "China may simply see things differently. It’s possible that the Chinese government has decided that the profits of companies like Alibaba and Tencent come more from rents than from actual value added"

In the perspective of Chinese government, it is simply unacceptable that a toilet ordered by the air force cost more than $20k, or the number of ship manufacturers diminishes over years, or the average age of NASA engineers went from below 36 to above 55, or the best minds of the country spends their prime time figuring out how to increase CTR for ads revenue. Manufacturing and advanced research is a key to a nation, and China recognizes it.

HWR_145• 5 years ago

it is simply unacceptable that a toilet ordered by the air force cost more than $20k

Why do people get hung up on this? Specialty parts cost a lot.

HWR_145• 5 years ago

From my understanding, Jack Ma was allowed to own whatever toys and mistresses he wanted. He could even have some outside of China so he feels safe. His mistake was thinking that the American dynamic of "money equals real power" held true in China.

Decker87• 5 years ago

You're agreeing with the author in a rather disagreeable tone.

refurb2• 5 years ago

Agree with your overall assessment, but the 5 year plans are certainly "flexible" and not all goals are consistently met. Often goals will changes mid-5 year span to accommodate reality. Think about your own personal development plan at work, but not that bad.

I do agree that "power" is the issue here. It doesn't take much for China to look at how Bezos or Elon act and say "yeah, no, we're not going to have corporate leaders challenging the Party publicly".

inglor_cz2• 5 years ago

The five year plan is interesting, because I was born in a country that worshipped its five year plans ("pětiletky"). It was the Czechoslovak Socialist Republic.

Now the thing about five year plans was that they worked rather well at the beginning, so approximately until 1960. Back then, the economic power of a country was measured by its heavy industry, and in a post-WWII world where there was war damage to be fixed, an entire eastern part of the country (Slovakia) to be modernized from its earlier rural state, and new housing stock to be built, concentration of our five year plans on heavy industry made sense.

But slowly the world development started to diverge from the coal-and-steel line. And our central planners didn't take notice, or rather underestimated the significance of that development. They had, after all, a lot of success earlier with coal and steel, so they continued to plan for more coal and steel. Also, a lot of workers in those industries were card-carrying members of the Communist party, so it made sense to reward them for their loyalty.

We slowly lost our development edge, fell behind the West in automation, computer technology, semiconductors. The overemphasis on industry led to major ecological problems and pollution, and the emerging ecological initiatives proved to be a fertile ground for opposition. In 1989, the regime fell, and we were left with a huge, absolutely bloated, but mostly obsolete coal and steel industry that could not compete anymore. And its subsequent collapse was a source of significant societal disruption.

I saw the collapse of that industry first hand, growing up in a coal and steel city (Ostrava; just take Google Maps and look at the enormous chunks of industrial structures located literally inside the city, with residential buildings right next to the factories).

Now China does not seem to fall behind yet, they also allow a lot more capitalism than Communist Czechoslovakia did (in our country, even a private café was a rare sight; the regime was so ideologically pure that it purged even most self-employed people from independence into formal jobs).

But I can see a similar "it-must-stay-the-same-itis" in their proclamations that the country must never deindustrialize. Never is a bad word in mortal's mouths. If they fixate on industry at the cost of all other developments, they may go down the same route as Czechoslovakia eventually.

rini17• 5 years ago

My dad worked in Tesla Elektroakustika Bratislava manufacturing electronics and often recounted that a member of Politbyro said "Prečo vyrábate polovodiče a nie vodiče?" "Why do you make semiconductors instead of conductors?"

There isn't such kind of boneheaded inertia in China. Yet.

Animats3• 5 years ago

But I can see a similar "it-must-stay-the-same-itis" in their proclamations that the country must never deindustrialize.

There's some of that. There's an official push in China towards self-sufficiency, and eliminating reliance on imports. The US used to have such a policy during the Cold War.

The coal and steel fixation created the European Union, which was originally "the European Coal and Steel Community". Britain grew to be a world power through coal and steel. As those declined in importance, they were taken over by the Government, under what was derisively called "lemon socialism". There was British Steel, British Coal, British Rail... All the old labor-intensive plants.

China has problems with inefficient state-owned businesses, which tend to be jobs programs. They're mostly owned by provincial and municipal governments, not the national government. Lots of steel mills and coal mines, inevitably. But since they make steel for export, they can't be too inefficient.

djanogo• 5 years ago

I am not surprised after seeing how US tech companies created their own rules what public can discuss and undermined democratically elected leaders. They don't want Chinese versions of Jack D, MarkZ, and numerous MSM groups. No country would want social media companies that US now has.

mcguire2• 5 years ago

Alternative hypothesis: This is just another round in the infighting between China's party, government, and big business, one that the party and government intends to win.

China's big, customer-facing "tech industry" (I agree with that part of the argument) lives in the same environment as that of the rest of the world, with the same ability to generate the same large profits. Those large profits provide a power base that threatens the party, which in turn uses its governmental power to smack down anything threatening.

AzzieElbab• 5 years ago

Is it just a big fu to investors of now delisted companies?

clipradiowallet• 5 years ago

Here's a conspiracy theory...China is not smashing its' tech industry. The CCP could be repositioning [financially] within the sector. Step 1 is to add regulation - which depresses market prices and gives the state more power. Step 2 is to swoop in and buy as much as is available at the [newly] depressed prices.

It's unlikely, but in their position it's what I would want to do.

papito4• 5 years ago

China is "cooling" certain sectors, to spur growth in physical tech and manufacturing. This is where the future power is - not in social networks and ad sales, it's in stuff. Just look at what happens when we can't manufacture our own chips. Car factories halt. Personal computing prices spike. Military tech sputters.

China is doing what the U.S. would normally do in an effective anti-monopoly action, if our system was not broken and the government not bought with its guts by billionaires floating in tax-cut windfall.

Now we have entities that have more legal resources than the government, which is a recipe for disaster (and runaway legalized corruption).

China sees what happens when you let money run loose through power structures, and it does not want the same fate.

Nbox9• 5 years ago

This is where the future power is - not in social networks and ad sales, it's in stuff.]

I strongly disagree. The US was not able to win the Vietnam war with 100x the amount of military stuff. Stuxnet halted Iranian nuclear research. US elections were interfered with by foreign hackers. Microsoft’s revenue is >$100B a year, and it’s mostly software driven.

Information, data, data-analysis, networking and intelligence is where power comes from.

papito4• 5 years ago

And how is your example even relevant to a war from a deep pre-Internet era? What about WWII? What about Desert Storm? There is absolutely no guarantee that your adversary does not outplay you in internet cat and mouse games right from the start, like this recent disastrous scenario shows: https://www.defenseone.com/policy/2021/07/it-failed-miserabl...

And then what? If we think future wars will be won by hackers in hoodies, it's our funeral. An out-of-control hacking war will have to escalate to bare metal war. People will want to see explosions on TV, as they lose power and are unable to gas up their cars.

ghomrassen3• 5 years ago

They are not doing this for anti-monopoly reasons. It's purely because they thought the tech companies had more data, and therefore more power than them.

One of the examples I've seen over here, which I can't seem to find in English, was an infographic created by Didi. Either stupidly or some tech dick-waving contest, they made a chart of the most hard working government agencies in Beijing. They had all this work habit data and they released it as a fun little thing.

Suffice it to say, it's hard to find now and a smaller part of a overarching data issue that has gone out of the government's hands.

Totalitarians are gonna totalitarian, but now they've learned to do it effectively and use the terminology the free world does to make it sound righteous.

xmly• 5 years ago

"Fake-tech" industry, more precisely. If you can read Chinese, you know people in China percepts whether the company is a real-tech company based on whether they have been sanctioned by US. And most of Chinese think the fake-techs consumes too much resource and contributes too little, the more resources should be put on the real-tech companies.

mrkramer2• 5 years ago

Why is US smashing its tech industry that's the question.

rapjr9• 5 years ago

Another potential explanation is China is preparing for a possible cyberwar and after seeing the USA population manipulated by social networking during elections has decided they want their population to be less vulnerable to outside manipulation.

fennecfoxy3• 5 years ago

They're not smashing it, they're taking control of it. Let capitalism and a faux free market/private companies do all the work & IP theft and then when they're successful take them over and apply party politics to them.

Bet it's the same reason they took HK early.

Why is China smashing its tech industry?

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