China’s Race to Dominate: Listen to Global Tech Wars
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I was joking with my producer Jacob the other day, who's one of Pushkin's most valuable employees. I hired him to be my assistant years ago in the most random manner possible. I think he saw a message board posting somewhere and I interviewed him for basically 10 minutes and said, go for it. I made a wild gamble on someone and got incredibly lucky.

But let's be honest, you can't rely on getting lucky when it comes to hiring people. Lightning's not going to strike more than once. You need a system and you need tools. And that's why LinkedIn is so important. LinkedIn is more than just a job board. They help connect you with professionals you can't find anywhere else. Even people who aren't actively looking for a new job.

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The audiobook is called Global Tech Wars, China's Race to Dominate. It's by James King, a journalist at the Financial Times. And it's about China's push to the technological frontier.

And we see China's technological rise today, of course, in everything from AI to electric cars. And this story of China's technological rise, it goes beyond just technology. It goes beyond just business. It is a global geopolitical story that is going to change so much about how the world works. If you like the excerpt and want to hear more, you can get the full book at Pushkin.fm, at Audible, at Spotify, or wherever you get podcasts.

your audiobooks. Part one, a tech superpower emerges. Chapter one, Shenzhen speed. In the heart of Shenzhen, a city in southern China is the district of Huaqiangbei and it's home to the biggest electronics market in the world.

It's a vast warren of stalls selling every kind of electronic component under the sun.

So we're standing in the middle of one of the Huaqiangbei electronics markets and the scene is really quite impressive. It's basically one stall after another. There's hundreds of stalls here. I mean, there's just piles of electronic components on top of each other in a very higgledy-piggledy way. It looks like a rather eccentric hardware shop where you know that you're selling everything, but you're not quite sure where anything is.

So we have signal generators. We have...

Multimetres, lots of different kinds of multimetres. Obviously, any microcontroller you could possibly want. In the market, I met Noah Zirkin. He's a tech inventor from the US and he's chosen to innovate new products, not back home in America, but here in Shenzhen. For him, the electronics market is an Aladdin's cave,

of potential treasures. USB connectors of every sort, including some rather exotic ones. And these ones over here with lots of like brass looking nodules coming out of them. Something that I've actually been looking for for close to a year. A suitable one. Yes. So what kind of products could you build with the components that we can find in these markets here?

Everything from consumer electronics devices to robots, drones, military systems to maybe even space systems, right? You can build anything using the components here. Yes, I mean, it's such a tough question because you can literally build anything.

For decades, this part of China was known as the electronics workshop of the world. But these days, Shenzhen doesn't just make other people's technology, it's building its own Chinese technology.

And in the process, China is emerging as a tech innovator on a course to overtake the U.S. as the most important technology power in the world. Our excerpt of Global Tech Wars will continue in just a minute.

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We're here in Shenzhen. We're standing by a busy road intersection surrounded by a forest of enormous skyscrapers, glass and metal buildings reaching all the way down this long avenue. Cars, taxis, even motorbikes riding on the pavements around us. Pretty much in the center of this vast metropolis.

Shenzhen is known as the Silicon Valley of China, and it's changed dramatically in the last few decades. About 20 years ago, Shenzhen and the cities around it in the Pearl River Delta made a name for themselves by mostly manufacturing other countries' technologies and maybe copying it as well.

But now we're on the brink of a really totally different new era. These days, Chinese companies are making their own brands, innovating their own technology and selling that to Europe, America and all over the rest of the world.

Shenzhen is home to some of the biggest names in Chinese technology. The internet giant Tencent is based here, as is Huawei, the tech behemoth that's found itself at the centre of US-China tensions over technology in recent years.

There are newer trailblazers too. DJI, which essentially invented the consumer drone market, is a Shenzhen company, as is BYD, the Chinese carmaker that is fast becoming a dominant force in electric vehicles. It all points in one direction, something a think tank recently highlighted, that China is overtaking the US in its capacity to innovate.

And it's now ahead of the US in everything from advanced batteries to hypersonic aircraft, quantum communications and supercomputers. To understand how that has happened, you need to look at China's long history of manufacturing consumer technology. OK, in this bin here, these are sort of ancient prototype parts. But so let's take this down. And this is...

This needs to go on the floor. In his workshop, a short walk away from Shenzhen's electronics markets, the American inventor Noah Zirkin shows me what he's building: an augmented reality headset.

Okay, so there are... You see there are these three circuit boards up here, and that's just for making the displays work. And there are these two sensors, each of which have two little cameras on them, little fisheye cameras to track your hands. Then there are these two big curved mirrors that rest in front of your eyes. And the electronics on this headset...

are basically all made from stuff that you can find in the market downstairs. Tech inventors like Noah have chosen to base themselves in Shenzhen rather than the United States because being in Shenzhen means having instant access to a vast supply chain of components and factories.

It means they can work quickly, develop prototype products, test them and manufacture them all at a rapid rate. Being able to source those components, I was able to order things mostly from places that have stalls representing them in the Huaqiangbei markets that are right here and have them arrive at my doorstep, if not that day, the next day.

Same with the PCBs, the circuit boards. Nowhere else can you get 24-hour turnaround. If I make a mistake on one of my prototypes, I can identify it, change it anywhere else. This is a big deal. So I can do a prototype iteration in 24 to 48 hours. That is not true anywhere else in the world.

The ability to prototype and manufacture tech products rapidly is giving rise to some really exciting companies in Shenzhen.

Very small factory. Matter of fact, this is not a factory. It looks like an exhibition center, but it's not. This is our R&D testing field. So where you can see along the windows, there are over 250 chairs. And those for R&D and production staff only. A few miles north of Huaqiangbei are the offices of the robotic startup UiBot.

They design and build industrial robots. In their bright and spacious new research and development center, dozens of robots move around the vast open floor, guided by lasers and algorithms. The company is growing rapidly. Just a few years ago, it was a neighbor of Noah Zirkin's in a small workshop above the electronics market.

Guan Jian from UiBot says access to supply chains and manufacturing expertise means startups here can operate at what he calls Shenzhen speed.

For the most typical example, during the pandemic, we built an anti-pandemic robot with UVC lights and a thermometer camera on top within 14 days. I'm not talking about 14 days to get the conception of a robot. I mean 14 days for the first prototype. From an idea to a prototype, two weeks. That's supply chain. How were you able to do that? We can get every single component downstairs in Huajiang North.

This means UI Bot is rapidly catching up with more established US and European competitors. Before the pandemic, there were several strong competitors globally.

We look up to them and we try to study from them. After the pandemic, when we joined a conference in Germany, we strangely realized that the European players, they're still trying to sell the same thing with the one before.

Three years earlier. And when we look at ourselves, everything's totally different. So your R&D effort was moving at Shenzhen speed? Well, I prefer to call it Shenzhen speed, yes. For newer startups like UiBot, there are plenty of examples around Shenzhen of the potential global success that Chinese companies can aspire to.

We've come to a different part of Shenzhen. We're now in one of the big tech centres of this city. We're surrounded by huge buildings, mostly occupied by some of the biggest tech companies in China and in the world. There's a sound of construction in the background. Three more huge blocks are going up, soon to be occupied by

other Chinese tech companies. And we're standing in front of the brand new headquarters of one of the companies that's really put Shenzhen on the map in the last few years, and that's DJI.

If you want an example of a Chinese company totally dominating a sector, Shenzhen's drone maker DJI is a good example. Over the last decade, it effectively invented the consumer drone market. It now sells eight out of ten drones around the world. When it's coming towards us, it really looks like an insect. I'd say a dragonfly or something like that.

It's now gone, I don't know, that must be 20, 30 metres into the sky. It's just hovering over the forecourt of this building. Now it's going even higher. Oh my, it's now outside. Success for DJI means a massive new headquarters. Two towers that appear to hover in the sky, called Sky City. Everywhere we go in Shenzhen, these enormous buildings, you know. So if you come here six years ago, now it's seven years ago, there's no this building.

But right now, because we got this piece of land in 2016, and in 2022, we move into this building. So after six years, we have this beautiful twin building and campus here. And right now, we live here more than one and a half year already. Christina Zhang showed us around the buildings and told us about the secret drone testing area housed inside one of the towers.

So we have the flying site.

inside this building. You may see of this toolbox, there are four floor high area. - Four floor high area. - That's the lighting side.

- Wow. - Yeah. - That's very interesting. So they can fly it in there in peace, they know nobody is watching, you can maintain your intellectual property, nobody can see. - Yeah, and also even without the good condition, like if it's raining, windy, you can still test inside. - Yeah. - Yeah. - Have you got any really cool prototypes you're working on at the moment? - We have so many, but I cannot share now. -

A company like DJI represents something that 10 or 20 years ago, to observers in the West at least, would have been difficult to imagine. A Chinese company way out in front of the competition, setting the pace in the creation of leading tech products. But China's tech ambitions are not limited to robots or drones.

China wants to lead the world in all kinds of cutting-edge technologies. We'll be back in just a minute. Homeowners, if you want to sell your house fast for all cash, stop what you are doing and listen to this because Osborne Homes wants to buy your house right now. I'm Alec from Osborne Homes, and we want to buy your house. Nobody buys more homes in California than Osborne, whether it's a total fixer-upper or in perfect condition. Osborne Homes is the easiest way to sell your house fast.

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The drone maker DJI is one example of a Chinese tech company that's leading its field in the development of technology. Huawei is another, and China might be leading in a multitude of other areas.

Last year, the Australian Strategic Policy Institute, a think tank, made waves when it concluded that China now leads the world in 37 out of 44 critical areas of technology. Another think tank, the Information Technology and Innovation Foundation, based in Washington, warned that China is evolving from an imitator to an innovator.

It's easy to forget now just how far behind China was in technology and how dismissive most of us in the West were about China's tech capabilities all the way up till pretty recently. Matt Sheehan is a fellow in the Asia program of the Carnegie Endowment for International Peace in the U.S.

Where would you say China is right now? Is China catching up to the U.S. level in many technologies? Is it a peer competitor already? Is it on a trajectory to overtake?

I think the term peer competitor captures it. I mean, there are some areas where the US is clearly ahead in the frontiers of AI, in large language models, in generative AI. That's an area where the US can pretty comfortably say we are ahead. But if you look across other areas, if you look at renewable energy technologies, clean technologies, battery-powered vehicles, electric vehicles, China is

far and away the global leader in these. It has the supply chains, it has the deep manufacturing expertise,

And it's really on a trajectory currently to dominate those industries globally. Look at an area like quantum. It's still a wide open field. We don't know which sort of path is going to be the most promising, but China is showing results that are just as impressive or roughly on par with the U.S. across a few of those different approaches globally.

If you look at, you know, the success of platform technology companies, obviously the U.S. has some of the global leaders in Google, Facebook, Amazon. But, you know, the most popular app in the world right now is a Chinese app. It's TikTok. In recent years, China has overtaken the U.S. to become the biggest filer of patents in the world.

But Sheehan says innovation is not just about coming up with new ideas. It's about turning them into solutions and products at a scale that can reach a mass market. This is really an area where China's manufacturing prowess is going to come into play. You know, the idea of China being the factory of the world just because it has cheap labor is way out of date. China's advantage is not the cost of its labor. It's the fact that it's built up

the most sophisticated, intricate manufacturing ecosystem in the world, that they have trained engineers who have spent 30, 40 years progressively building and refining more and more precise manufacturing technologies, and especially learning how to take a good idea and scale it up to the level of hundreds of thousands or millions of products. The Chinese government has technological progress

at the center of its national ambitions. Matt Sheehan says it's not clear that China will inevitably overtake the U.S. But, he says, China's progress so far suggests that the U.S. cannot assume that it will always be in the lead.

But I think especially if you zoom in on the United States and on Silicon Valley, we have this narrative that technological innovation, freedom of speech and democracy are all intimately intertwined, that you cannot have innovation unless you have free speech, free Internet, political freedoms.

And I think that was a nice story. It fit broadly with our perception of the way that creativity works and the way that business and markets work.

I think what China has done over the last 10, 15 years, it's essentially pulled apart that narrative that innovation depends on certain types of freedoms. You can have world-leading apps come out of a country that doesn't have a free internet. You can have some of the biggest and most successful technology companies in a country that has quite controlled markets and a very heavy-handed government.

And I think it turned a lot of ideas that we had in the West on their head. It's a profound conclusion. It used to be an article of faith that you need a democracy to spur tech innovation. But China is turning that argument upside down.

In an authoritarian state, you can still innovate tech products and sell them to the rest of the world via gloves-off, bare-knuckle capitalism. So in your daily life, how many times do you feel surprised by new products being made and new innovations? Almost every day. Almost every day.

Qi Zhou is a venture capitalist based in Shenzhen. He spent years working at Huawei and in Japanese tech companies before returning to China to capitalize on what he saw as a boom in Chinese innovation. I forced myself to meet at least one company one day, at least one company one day, and read five to ten business plans one day.

Five to ten businesses. Every day? Every day, almost. So I can see a lot of innovative products. Zhou agrees that China's expertise in manufacturing has helped tech companies develop. But he says there's another factor spurring Chinese firms on.

the intense competition between Chinese companies for Chinese tech consumers. Chinese guys like to use new things, like application, one app, and they will give up one app very quickly, too. So if you can't let them know the valuations of your app, they will give up very quickly. This is one point. And another point is,

Competition. Competition. This is a different culture, I think. In Western countries, I do my business, you do yours. But in China, I don't think so. I do my business and I do your business too. Zhou says Chinese companies think of it in terms of survival. Innovate or die. Survive. Survive is a very important keyword in China.

China's transformation into a global tech superpower to rival the U.S. is an incredible story. But the question now is whether China is going to maintain that momentum and power past the U.S. and other countries to become the tech power in the world. The global success of Shenzhen's companies suggest it might happen.

But it's not a given. I would say the most advanced technology is not in China, even now. In some key industries, we need some time. We need time to develop, like semiconductors, like AIs. So China is not the most advanced in terms of technology, but it's catching up fast, right?

Do you think that China one day, soon, in the next few years, could become the most advanced country for technology? We developed very rapidly before today. After that, I cannot predict. We are still working hard on catching up, but when we overtake the U.S., we don't know.

And I think from the point of government, we don't think one day we have to. We have to overtake America. I don't think so. As the boss of a company, we have to overtake the other guys. I am a businessman. When I invest in a company, I hope they will be the first one in the world one day.

A changing of the guard when it comes to technology happens very rarely. For the first time, we're seeing global tech come out of an authoritarian state without free internet, without freedom of expression, and where surveillance cameras monitor your every move.

If China wins the tech race, the impact on the rest of the world will be huge. And we're already starting to see it. That was an excerpt from the new audiobook, Global Tech Wars, China's Race to Dominate.

The full audiobook is available at Pushkin.fm, at Audible, at Spotify, and everywhere else you can get audiobooks. One last note, What's Your Problem? will be off for the next few weeks, and then we'll be back with more episodes.

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