(This piece is my year in review; I skipped a letter last year*)*

One way that Silicon Valley and the Communist Party resemble each other is that both are serious, self-serious, and indeed, completely humorless.

If the Bay Area once had an impish side, it has gone the way of most hardware tinkerers and hippie communes. Which of the tech titans are funny? In public, they tend to speak in one of two registers. The first is the blandly corporate tone we’ve come to expect when we see them dragged before Congressional hearings or fireside chats. The second leans philosophical, as they compose their features into the sort of reverie appropriate for issuing apocalyptic prophecies on AI. Sam Altman once combined both registers at a tech conference when he said: “I think that AI will probably, most likely, sort of lead to the end of the world. But in the meantime, there will be great companies created with serious machine learning.” Actually that was pretty funny.

It wouldn’t be news to the Central Committee that only the paranoid survive. The Communist Party speaks in the same two registers as the tech titans. The po-faced men on the Politburo tend to make extraordinarily bland speeches, laced occasionally with a murderous warning against those who cross the party’s interests. How funny is the big guy? We can take a look at an official list of Xi Jinping’s jokes, helpfully published by party propagandists. These wisecracks include the following: “On an inspection tour to Jiangsu, Xi quipped that the true measure of water cleanliness is whether the mayor would dare to swim in the water.” Or try this reminiscence that Xi offered on bad air quality: “The PM2.5 back then was even worse than it is now; I used to joke that it was PM250.” Yes, such a humorous fellow is the general secretary.1

It’s nearly as dangerous to tweet a joke about a top VC as it is to make a joke about a member of the Central Committee. People who are dead serious tend not to embody sparkling irony. Yet the Communist Party and Silicon Valley are two of the most powerful forces shaping our world today. Their initiatives increase their own centrality while weakening the agency of whole nation states. Perhaps they are successful because they are remorseless.

Earlier this year, I moved from Yale to Stanford. The sun and the dynamism of the west coast have drawn me back. I found a Bay Area that has grown a lot weirder since I lived there a decade ago. In 2015, people were mostly working on consumer apps, cryptocurrencies, and some business software. Though it felt exciting, it looks in retrospect like a more innocent, even a more sedate, time. Today, AI dictates everything in San Francisco while the tech scene plays a much larger political role in the United States. I can’t get over how strange it all feels. In the midst of California’s natural beauty, nerds are trying to build God in a Box; meanwhile, Peter Thiel hovers in the background presenting lectures on the nature of the Antichrist. This eldritch setting feels more appropriate for a Gothic horror novel than for real life.

Before anyone gets the wrong idea, I want to say that I am rooting for San Francisco. It’s tempting to gawk at the craziness of the culture, as much of the east coast media tends to do. Yes, one can quickly find people who speak with the conviction of a cultist; no, I will not inject the peptides proffered by strangers. But there’s more to the Bay Area than unusual health practices. It is, after all, a place that creates not only new products, but also new modes of living. I’m struck that some east coast folks insist to me that driverless cars can’t work and won’t be accepted, even as these vehicles populate the streets of the Bay Area. Coverage of Silicon Valley increasingly reminds me of coverage of China, where a legacy media reporter might parachute in, write a dispatch on something that looks deranged, and leave without moving past caricature.

I enjoy San Francisco more than when I was younger because I now better appreciate what makes it work. I believe that Silicon Valley possesses plenty of virtues. To start, it is the most meritocratic part of America. Tech is so open towards immigrants that it has driven populists into a froth of rage. It remains male-heavy and practices plenty of gatekeeping. But San Francisco better embodies an ethos of openness relative to the rest of the country. Industries on the east coast — finance, media, universities, policy — tend to more carefully weigh name and pedigree. Young scientists aren’t told they ought to keep their innovations incremental and their attitude to hierarchy duly deferential, as they might hear in Boston. A smart young person could achieve much more over a few years in SF than in DC. People aren’t reminiscing over some lost golden age that took place decades ago, as New Yorkers in media might do.

San Francisco is forward looking and eager to try new ideas. Without this curiosity, it wouldn’t be able to create whole new product categories: iPhones, social media, large language models, and all sorts of digital services. For the most part, it’s positive that tech values speed: quick product cycles, quick replies to email. Past success creates an expectation that the next technological wave will be even more exciting. It’s good to keep building the future, though it’s sometimes absurd to hear someone pivot, mid-breath, from declaring that salvation lies in the blockchain to announcing that AI will solve everything.

People like to make fun of San Francisco for not drinking; well, that works pretty well for me. I enjoy board games and appreciate that it’s easier to find other players. I like SF house parties, where people take off their shoes at the entrance and enter a space in which speech can be heard over music, which feels so much more civilized than descending into a loud bar in New York. It’s easy to fall into a nerdy conversation almost immediately with someone young and earnest. The Bay Area has converged on Asian-American modes of socializing (though it lacks the emphasis on food). I find it charming that a San Francisco home that is poorly furnished and strewn with pizza boxes could be owned by a billionaire who can’t get around to setting up a bed for his mattress.

There’s still no better place for a smart, young person to go in the world than Silicon Valley. It adores the youth, especially those with technical skill and the ability to grind. Venture capitalists are chasing younger and younger founders: the median age of the latest Y Combinator cohort is only 24, down from 30 just three years ago. My favorite part of Silicon Valley is the cultivation of community. Tech founders are a close-knit group, always offering help to each other, but they circulate actively amidst the broader community too. (The finance industry in New York by contrast practices far greater secrecy.) Tech has organizations I think of as internal civic institutions that try to build community. They bring people together in San Francisco or retreats north of the city, bringing together young people to learn from older folks.

Silicon Valley also embodies a cultural tension. It is playing with new ideas while being open to newcomers; at the same time, it is a self-absorbed place that doesn’t think so much about the broader world. Young people who move to San Francisco already tend to be very online. They know what they’re signing up for. If they don’t fit in after a few years, they probably won’t stick around. San Francisco is a city that absorbs a lot of people with similar ethics, which reinforces its existing strengths and weaknesses.

Narrowness of mind is something that makes me uneasy about the tech world. Effective altruists, for example, began with sound ideas like concern for animal welfare as well as cost-benefit analyses for charitable giving. But these solid premises have launched some of its members towards intellectual worlds very distant from moral intuitions that most people hold; they’ve also sent a few into jail. The well-rounded type might struggle to stand out relative to people who are exceptionally talented in a technical domain. Hedge fund managers have views about the price of oil, interest rates, a reliably obscure historical episode, and a thousand other things. Tech titans more obsessively pursue a few ideas — as Elon Musk has on electric vehicles and space launches — rather than developing a robust model of the world.

So the 20-year-olds who accompanied Mr. Musk into the Department of Government Efficiency did not, I would say, distinguish themselves with their judiciousness. The Bay Area has all sorts of autistic tendencies. Though Silicon Valley values the ability to move fast, the rest of society has paid more attention to instances in which tech wants to break things. It is not surprising that hardcore contingents on both the left and the right have developed hostility to most everything that emerges from Silicon Valley.

There’s a general lack of cultural awareness in the Bay Area. It’s easy to hear at these parties that a person’s favorite nonfiction book is Seeing Like a State while their aspirationally favorite novel is Middlemarch. Silicon Valley often speaks in strange tongues, starting podcasts and shows that are popular within the tech world but do not travel far beyond the Bay Area. Though San Francisco has produced so much wealth, it is a relative underperformer in the national culture. Indie movie theaters keep closing down while all sorts of retail and art institutions suffer from the crumminess of downtown. The symphony and the opera keep cutting back on performances — after Esa-Pekka Salonen quit the directorship of the symphony, it hasn’t been able to name a successor. Wealthy folks in New York and LA have, for generations, pumped money into civic institutions. Tech elites mostly scorn traditional cultural venues and prefer to fund the next wave of technology instead.

One of the things I like about the finance industry is that it might be better at encouraging diverse opinions. Portfolio managers want to be right on average, but everyone is wrong three times a day before breakfast. So they relentlessly seek new information sources; consensus is rare, since there are always contrarians betting against the rest of the market. Tech cares less for dissent. Its movements are more herdlike, in which companies and startups chase one big technology at a time. Startups don’t need dissent; they want workers who can grind until the network effects kick in. VCs don’t like dissent, showing again and again that many have thin skins. That contributes to a culture I think of as Silicon Valley’s soft Leninism. When political winds shift, most people fall in line, most prominently this year as many tech voices embraced the right.

The two most insular cities I’ve lived in are San Francisco and Beijing. They are places where people are willing to risk apocalypse every day in order to reach utopia. Though Beijing is open only to a narrow slice of newcomers — the young, smart, and Han — its elites must think about the rest of the country and the rest of the world. San Francisco is more open, but when people move there, they stop thinking about the world at large. Tech folks may be the worst-traveled segment of American elites. People stop themselves from leaving in part because they can correctly claim to live in one of the most naturally beautiful corners of the world, in part because they feel they should not tear themselves away from inventing the future. More than any other topic, I’m bewildered by the way that Silicon Valley talks about AI.

Hallucinating the end of history

While critics of AI cite the spread of slop and rising power bills, AI’s architects are more focused on its potential to produce surging job losses. Anthropic chief Dario Amodei takes pains to point out that AI could push the unemployment rate to 20 percent by eviscerating white-collar work.2 I wonder whether this message is helping to endear his product to the public.

The most-read essay from Silicon Valley this year was AI 2027. The five authors, who come from the AI safety world, outline a scenario in which superintelligence wakes up in 2027; a decade later, it decides to annihilate humanity with biological weapons. My favorite detail in the report is that humanity would persist in a genetically modified form, after the AI reconstructs creatures that are “to humans what corgis are to wolves.” It’s hard to know what to make of this document, because the authors keep tucking important context into footnotes, repeatedly saying they do not endorse a prediction. Six months after publication, they stated that their timelines were lengthening, but even at the start their median forecast for the arrival of superintelligence was later than 2027. Why they put that year in their title remains beyond me.

It’s easy for conversations in San Francisco to collapse into AI. At a party, someone told me that we no longer have to worry about the future of manufacturing. Why not? “Because AI will solve it for us.” At another, I heard someone say the same thing about climate change. One of the questions I receive most frequently anywhere is when Beijing intends to seize Taiwan. But only in San Francisco do people insist that Beijing wants Taiwan for its production of AI chips. In vain do I protest that there are historical and geopolitical reasons motivating the desire, that chip fabs cannot be violently seized, and anyway that Beijing has coveted Taiwan for approximately seven decades before people were talking about AI.

Silicon Valley’s views on AI made more sense to me after I learned the term “decisive strategic advantage.” It was first used by Nick Bostrom’s 2014 book Superintelligence, which defined it as a technology sufficient to achieve “complete world domination.” How might anyone gain a DSA? A superintelligence might develop cyber advantages that cripple the adversary’s command-and-control capabilities. Or the superintelligence could self-recursively improve such that the lab or state that controls it gains an insurmountable scientific advantage. Once an AI reaches a certain capability threshold, it might need only weeks or hours to evolve into a superintelligence.3 And if an American lab builds it, it might help to lock in the dominance of another American century.

If you buy the potential of AI, then you might worry about the corgi-fication of humanity by way of biological weapons. This hope also helps to explain the semiconductor controls unveiled by the Biden administration in 2022. If the policymakers believe that DSA is within reach, then it makes sense to throw almost everything into grasping it while blocking the adversary from the same. And it barely matters if these controls stimulate Chinese companies to invent alternatives to American technologies, because the competition will be won in years, not decades.

The trouble with these calculations is that they mire us in epistemically tricky terrain. I’m bothered by how quickly the discussions of AI become utopian or apocalyptic. As Sam Altman once said (and again this is fairly humorous): “AI will be either the best or the worst thing ever.” It’s a Pascal’s Wager, in which we’re sure that the values are infinite, but we don’t know in which direction. It also forces thinking to be obsessively short term. People start losing interest in problems of the next five or ten years, because superintelligence will have already changed everything. The big political and technological questions we need to discuss are only those that matter to the speed of AI development. Furthermore, we must sprint towards a post-superintelligence world even though we have no real idea what it will bring.

Effective altruists used to be known for their insistence on thinking about the very long run; much more of the movement now is concerned about the development of AI in the next year. Call me a romantic, but I believe that there will be a future, and indeed a long future, beyond 2027. History will not end. We need to cultivate the skill of exact thinking in demented times.

I am skeptical of the decisive strategic advantage when I filter it through my main preoccupation: understanding China’s technology trajectories. On AI, China is behind the US, but not by years. There’s no question that American reasoning models are more sophisticated than the likes of DeepSeek and Qwen. But the Chinese efforts are doggedly in pursuit, sometimes a bit closer to US models, sometimes a bit further. By virtue of being open-source (or at least open-weight), the Chinese models have found receptive customers overseas, sometimes with American tech companies.4 If US labs achieve superintelligence, the Chinese labs are probably on a good footing to follow closely. Unless the DSA is decisive immediately, it’s not obvious that the US will have a monopoly on this technology, just as it could not keep it over the bomb.

One advantage for Beijing is that much of the global AI talent is Chinese. We can tell from the CVs of researchers as well as occasional disclosures from top labs (for example from Meta) that a large percentage of AI researchers earned their degrees from Chinese universities. American labs may be able to declare that “our Chinese are better than their Chinese.” But some of these Chinese researchers may decide to repatriate. I know that many of them prefer to stay in the US: their compensation might be higher by an order of magnitude, they have access to compute, and they can work with top peers.*5*But they may also tire of the uncertainty created by Trump’s immigration policy. It’s never worth forgetting that at the dawn of the Cold War, the US deported Qian Xuesen, the CalTech professor who then built missile delivery systems for Beijing. Or these Chinese researchers expect life in Shanghai to be safer or more fun than in San Francisco. Or they miss mom. People move for all sorts of reasons, so I’m reluctant to believe that the US has a durable talent advantage.

China has other advantages in building AI. Superintelligence will demand a superload of power. By now everyone has seen the chart with two curves: US electrical generation capacity, which has barely budged upwards since the year 2000; and China’s capacity, which was one-third US levels in 2000 and more than two-and-a-half times US levels in 2024. Beijing is building so much solar, coal, and nuclear to make sure that no data center shall be in want. Though the US has done a superb job building data centers, it hasn’t prepared enough for other bottlenecks. Especially not as Trump’s dislike of wind turbines has removed this source of growth. Speaking of Trump’s whimsy, he has also been generous with selling close-to-leading chips to Beijing. That’s another reason that data centers might not represent a US advantage for long.

Silicon Valley has not demonstrated joined-up thinking for deploying AI. It would help if they learned from the central planners. The AI labs have not shown that they’re thinking seriously about how to diffuse the technology throughout society, which will require extensive regulatory and legal reform. How else will AI be able to fold doctors and lawyers into its tender mercies? Doing politics will also mean reaching out to more of the electorate, who are often uneasy with Silicon Valley’s promises while they see rising electrical bills. Silicon Valley has done a marvelous job in building data centers. But tech titans don’t look ready to plan for later steps in leading the whole-of-society effort into deploying AI everywhere.

The Communist Party lives for whole-of-society efforts. That’s what Leninist systems are built for. Beijing has set targets for deploying AI across society, though as usual with planning announcements, these numerical targets should be taken seriously and not literally. Chinese founders talk about AI mostly as a technology to be harnessed rather than a fickle power that might threaten all.6 Rather than building superintelligence, Chinese companies have been more interested in embedding AI into robots and manufacturing lines. Some researchers believe that this sort of embodied AI might present the real path towards superintelligence.*7*We might furthermore wonder how the US and China will use AI. Since the US is much more services-driven, Americans may be using AI to produce more powerpoints and lawsuits; China, by virtue of being the global manufacturer, has the option to scale up production of more electronics, more drones, and more munitions.

Dean Ball, who helped craft the White House’s action plan on AI, has written a perceptive post on how the US is playing to its strengths — software, chips, cloud computing, financing — while China is also focused on leaning on manufacturing excellence. In his view, “the US economy is increasingly a highly leveraged bet on deep learning.” Certainly there’s a lot of money invested here, but it looks risky to be so concentrated. I believe it’s unbecoming for the world’s largest economy to be so levered on one technology. That’s a more appropriate strategy for a small country. Why shouldn’t the US be better positioned across the entirety of the supply chain, from electron production to electronics production?

I am not a skeptic of AI. I am a skeptic only of the decisive strategic advantage, which treats awakening the superintelligence as the final goal. Rather than “winning the AI race,” I prefer to say that the US and China need to “win the AI future.” There is no race with a clear end point or a shiny medal for first place. Winning the future is the more appropriately capacious term that incorporates the agenda to build good reasoning models as well as the effort to diffuse it across society. For the US to come ahead on AI, it should build more power, revive its manufacturing base, and figure out how to make companies and workers make use of this technology. Otherwise China might do better when compute is no longer the main bottleneck.

The humming tech engine

I’ve had Silicon Valley friends tell me that they are planning a trip to China nearly every month this year. Silicon Valley respects and fears companies from only one other country. Game recognizes game, so to speak. Tech founders may begrudge China’s restrictions; and some companies have suffered directly from IP theft. But they also recognize that Chinese companies can move even faster than they do with their teams of motivated workers; and Chinese manufacturers are far ahead of US capabilities on anything involving physical production. Some founders and VCs are impressed with the fact that Chinese AI companies have gotten this far while suffering American tech restrictions, while leading in open-source to boot. VCs are wondering whether they may still invest in Chinese startups or Chinese founders who have moved abroad.

2025 is the year that Chinese tech successes have really blossomed into the wider American consciousness. There’s no need to retread the coverage around DeepSeek, the surge of electric vehicle exports, or new developments in robotics. When I first moved from Silicon Valley to China in 2017, I felt some degree of skepticism from my friends that I was taking myself out of the beating heart of the technological universe and into the unknown. But it was clear to me that Chinese firms were improving on quality and taking global market share. I wrote in my 2019 letter: “Chinese workers are working with the latest tools to produce most of the world’s goods; over the longer term, my hypothesis is that they’ll be able to replicate the tooling and make just as good final products.”

I think that has become closer to consensus views. I believe that Chinese technological success is now the rule rather than the exception. There are two fields in which China is substantially behind the west: semiconductors and aviation. The chip sector is gingerly attempting to expand under the weight of US restrictions; meanwhile, China’s answer to Airbus and Boeing is on a very long runway. I grant that these are two critical technologies, but China has attained technological leadership almost everywhere else. And I believe its technological momentum will continue rolling onwards to engulf more of their western competitors over the next decade.

The electric vehicle industry is the sharp tip of the spear of China’s global success. Chinese EVs have greater functionalities than western models while selling at lower price points. A rule of thumb is that it takes five years from an American, German, or Japanese automaker to dream up a new car design and launch that model on the roads; in China, it’s closer to 18 months. The Chinese market is full of demanding customers as well as fast-iterating automotive suppliers. It also has a more productive workforce. According to Tesla’s corporate disclosures, a worker at a Gigafactory in China produces an average of 47 vehicles a year; a worker at a Gigafactory in California produces an average of 20.8

China’s automotive success is biting into Germany more than anywhere else. I keep a scrapbook filled with mournful remarks that German executives offer to newspapers. “Most of what German Mittelstand firms do these days, Chinese companies can do just as well,” said a consultant to the Financial Times. “In my sector they look at the price-point of the market leader and sell for roughly half of that,” the boss of a medical devicemaker told the Economist. It’s never hard to find parades of gloomy Germans. Now more than ever it looks like their core competences are threatened by Chinese firms.

I often think of the case of Xiaomi. In 2021, Lei Jun vowed that the company he founded would break into the EV business. Four years later, Xiaomi started shipping cars to customers. Not only that, a Xiaomi EV set a speed record at the Nürburgring racetrack in Germany. Compare Xiaomi to Apple, which spent 10 years and $10 billion studying whether to enter the EV market before it pulled the plug. The world’s most advanced consumer product company could not match Xiaomi’s feat. It’s cases like these that make me skeptical of reasoning about China’s tech successes through financial measures or productivity ratios. As of this writing, Xiaomi’s market value is $130 billion. That is only around half of the market value of AppLovin, the mobile advertisement company. Rather than being an indictment of Xiaomi, I view this imbalance as an indictment of financial valuations. Isn’t it better, from a national power perspective, to develop firms like Xiaomi, which calls its shots and then makes them?

This comparison between Xiaomi and Apple motivated an essay I wrote with Dragonomics founder Arthur Kroeber in an issue of Foreign Affairs. Our view is that China’s industrial success has roots in deep infrastructure. That includes not only ports and rail, it also includes data connectivity, electrification, and process knowledge. China’s strength lies in a robust manufacturing ecosystem full of self-reinforcing parts.

Chinese tech achievements that were apparent in 2025 were the fruits of investments made a decade ago. Given that China continues to invest massively in technology, I expect we’ll see yet more tech successes for another decade to come. Alexander Grothendieck used an analogy of a walnut to describe different approaches to mathematics, which might also apply to technology development. Some mathematicians crack their problems by finding the right spot to insert a chisel before making a clean strike. Grothendieck described his own approach as coming up with general solutions, as if he were immersing the walnut in a bath for such a long time that mere hand pressure would be enough to open it. The US comes up with exquisite and expensive solutions to its technology problems. China’s industrial ecosystem is more like a rising sea, softening many nuts at once.9

When these nuts open, it looks like China is producing a big wave of new products. These are its breakthroughs in drones, electric vehicles, and robotics. Years from now we may see greater success in biotech as well. I am keen to follow along China’s progress in electromagnetism over the next decade. China’s industrial ecosystem is leading the way in replacing combustion with electromagnetic processes. Everything is now drone, as the combination of cheaper batteries and better permanent magnets displaces the engine.10

One of the startling geopolitical moves of the year was how quickly Donald Trump withdrew his ~150 percent tariffs on China. Trump folded not out of beneficence, but because Xi Jinping denied rare earth magnets to most of the world, threatening many types of manufacturing operations. And yet I’m struck by Beijing’s relative restraint. Chinese producers are close to being monopolists not only in rare earths, but also electronics products, batteries, and many types of active pharmaceutical ingredients. In case China denies, say, cardiovascular drugs to the elderly, how long could a state hold out?

One might have expected the US to have roused itself after this bout of the trade war. But there have been too many declarations of Sputnik Moments without commensurate action. Barack Obama declared a Sputnik with China’s high-speed rail; Mark Warner repeated with Huawei’s 5G; Marc Andreessen called it with DeepSeek. The more that people use the term, the less likely that society spurs itself into taking it seriously.

I think the US continues to systematically underrate China’s industrial progress for several reasons.

First, too many western elites retain hope that China’s efforts will run out of fuel by its own accord. Industrial progress will be weighed down by demographic drag, the growing debt load, maybe even a political collapse. I won’t rule these out, but I don’t think they are likely to break China’s humming tech engine. Demographics in particular don’t matter for advanced technology — you don’t need a workforce of many millions to have robust production of semiconductors or EVs. South Korea, for example, has one of the world’s fastest shrinking populations while retaining its success in electronics production. And though China suffers broader economic headwinds, technology firms like Xiaomi continue to develop new products and enjoy rising revenues. Technology breakthroughs can occur even in a suffering society. Especially if the state continues to lavish resources on chips or anything that could represent an American chokepoint.

Second, western elites keep citing the wrong reasons for China’s success. When members of Congress get around to acknowledging China’s tech advancements, they do not fail to attribute causes to either industrial subsidies (also known as cheating) or IP theft (that is, stealing). These are legitimate claims, but China’s advantages extend far beyond them. That’s the creation of deep infrastructure as well as extensive industrial ecosystems that I describe above.

Probably the most underrated part of the Chinese system is the ferocity of market competition. It’s excusable not to see that, given that the party espouses so much Marxism. I would argue that China embodies both greater capitalist competition and greater capitalist excess than America does today. Part of the reason that China’s stock market trends sideways is that everyone’s profits are competed away. Big Tech might enjoy the monopolistic success smiled upon by Peter Thiel, coming almost to genteel agreements not to tread too hard upon each other’s business lines. Chinese firms have to fight it out in a rough-and-tumble environment, expanding all the time into each other’s core businesses, taking Jeff “your margin is my opportunity” Bezos with seriousness.

Third, western elites keep holding on to a distinction between “innovation,” which is mostly the remit of the west, and “scaling,” which they accept that China can do. I want to dissolve that distinction. Chinese workers innovate every day on the factory floor. By being the site of production, they have a keen sense of how to make technical improvements all the time. American scientists may be world leaders in dreaming up new ideas. But American manufacturers have been poor at building industries around these ideas. The history books point out that Bell Labs invented the first solar cell in 1957; today, the lab no longer exists while the solar industry moved to Germany and then to China. While Chinese universities have grown more capable at producing new ideas, it’s not clear that the American manufacturing base has grown stronger at commercializing new inventions.

I sometimes hear that the US will save manufacturers through automation. The truth is that Chinese factories tend to be ahead on automation: that’s a big part of the reason that Chinese Tesla workers are more productive than California Tesla workers. China regularly installs as many robots as the rest of the world put together. They are also able to provide greater amounts of training data for AI. We have to be careful not to let automation, like superintelligence, become an excuse for magical thinking rather than doing the hard work of capacity building.

Outlasting the adversary

The China discussions I get into on the east coast tend to focus on the country’s problems. Washington, DC in particular likes to ask questions like: didn’t we think that Japan was going to overrun the world with manufacturing before it fell apart? Isn’t China mostly a mess? These are ultimately variants of the form: how might China fail?

The west coast flavor of the discussion is different. People are more inclined to ask: what happens if China succeeds? That reflects, in part, Silicon Valley’s epistemic bias towards securing upside returns rather than minimizing downside risks. They also tend to make more frequent visits to China than folks in DC. “What if China succeeds?” is certainly the more interesting question to me, not only because my career has been studying China’s technological successes. The east coast questions deserve to be taken seriously. But I fear that dwelling on China’s failure modes will coax elites into complacency, serving a narrative that the US needs to change nothing before the adversary will topple, robbing the country of urgency to reform.

I want to be clear that though I expect China will overrun advanced technology industries, it won’t make the country a broad success. Over the past five years, it has been mired in disinflationary growth, where young people struggle to find a job and find a spouse. The political system is growing even more opaque, terrifying even the insiders. This year, Xi deposed a dozen generals of the People’s Liberation Army, one of whom was also a sitting Politburo member. I wonder how many people inside the Politburo feel confident about where they stand with Xi.

Entrepreneurs are on even worse ground. Earlier this year, investors greeted Xi’s handshake with prominent entrepreneurs (including Jack Ma) as good news. It was so, but who can be sure that Xi will not greet them differently once they revive the economy? Though Xi can cut entrepreneurs some slack, the trend is towards greater party control over business and society. Xi himself doesn’t evince concern that economic growth is lackluster. It’s an acceptable tradeoff for making China’s economy less dependent on foreign powers. None of this is a formula for broad human flourishing. Rather, it is depriving Chinese of contact with the rest of the world.

Beijing has been working relentlessly to build up its resilience. While the US talks itself out of Sputnik Moments, Beijing has dedicated immense resources to patching up its own deficiencies. It’s not a theoretical fear that Chinese companies might lose access to American technologies. So the state is pouring more money than ever before into semiconductor makers and research universities. It is investing in clean technologies not so much because it cares about the climate, but because it wants to be self-sufficient in energy. And it is re-writing the rules of the global order, with caution because it has been a giant beneficiary of it, while the US is still wondering about what it wants from China. Beijing has been preparing for Cold War without eagerness for waging it, while the US wants to wage a Cold War without preparing for it.11

So here’s a potential way that China succeeds. Beijing’s goal is to make nearly every important product in the world, while everyone else supplies its commodities and services. By making the country mostly self-sufficient, and by vigorously policing the outputs of LLMs and social media, Xi might hope to make China resilient. He is building Fortress China stone by stone in order to outlast the adversary. Beijing doesn’t have to replicate American diplomatic, cultural, and financial superpowerdom. It might hope that its prowess in advanced manufacturing might deter the US. And its success in manufacturing might directly destabilize the US: by delivering the coup de grace to the rustbelt, the US might shed a few million more manufacturing jobs over the next decade. The job losses combined with AI psychosis, social media, and all the problems with phones could make national politics meaningfully worse.

I don’t think this scenario is likely to be successful. Authoritarian systems have always hoped for the implosion of liberal democracies, while it is the liberal democracies that have a better track record of endurance. But I also don’t think that authoritarian countries are obviously wrong to bet that western polarization will get worse. So it’s up to the US and Europe to show that they can hold on to their values while absorbing the technological changes coming their way.

That task is more challenging as Europe and the US grew more apart in 2025. This year, both regions were able to look upon each other with pity. And both were correct to do so. America’s global trust and favorability measures have collapsed in Trump’s second term. Meanwhile, Europe looks as economically stuck as it has ever been, pushing its politics to increasingly chaotic extremes. But I am still more optimistic for the US.

I don’t need to lament the damage done by the Trump administration this year: the erosion of alliances, the cruelty towards the weak, the wasting of time. Manufacturing and re-industrialization, which I spend most of my time thinking of, have been doing worse. The Biden administration tried to fund an ambitious program of industrial policy; but it was so plodding and proceduralist that it built little before voters re-elected Trump. Since Trump imposed tariffs in April, the US has lost around 65,000 manufacturing jobs.12 His administration shows little interest in capturing electromagnetism before China overruns that field. Trump is more interested in protectionism rather than export promotion, which risks turning American industries into fossils like its exquisitely protected and horribly inefficient shipbuilding industry.

One of the Trump administration’s biggest blunders was its decision to raid a battery plant in Georgia, which put 300 Korean engineers in chains before deporting them. I suspect that any Korean, Taiwanese, or European engineer would ponder that episode before accepting a job posting to the United States. What a contrast that looks with China’s approach, which for decades has been to welcome managers from Walmart, Apple, or Tesla to train its workforce.

Will the US solve manufacturing with AI? Well, maybe, because superintelligence is supposed to solve everything. But there’s a risk that AI will destabilize society before it fixes the industrial base. When I walk around the library at Stanford, I see students plugging everything into AI tools; when they need a break, they’re watching short-form videos on their phones. These videos have been marvelously transformed by AI tools. Shortly after OpenAI released Sora 2, I had brunch with a friend who told me that he created an AI video of himself expertly breakdancing that fooled his five-year-old; another friend piped up to say that she created an AI video of herself that fooled her mother. AI chatbots are skilled at providing emotional companionship: Jasmine Sun discussed how they are able to seduce any segment of society, while pointing to a survey that 52 percent of teens regularly interact with AI companions. I’m not advocating for regulation. But I think it’s reasonable for the world to hope that AI labs will exercise some degree of forbearance before they release their shattering tools.

While I feel apprehensive about the US, I am much more gloomy about Europe. I have a hard time squaring the poor prospects of Europe over the next decade with the smugness that Europeans have for themselves. I spent most of the summer in Copenhagen. There’s no doubt that quality of life in most European cities is superb, especially for what I care about: food, opera, walkable streets, access to nature. But a decade of low economic growth is biting. European prices and taxes can be so high while salaries can be so low. For all the American complaints about home affordability, relative housing costs can be even worse in big European cities. London has the house prices of California and the income levels of Mississippi.

I remember two vivid episodes from Copenhagen. One day I read the news that the share price of Novo Nordisk — unquestionably one of Europe’s technological successes, along with ASML — collapsed as a result of sustained competition from US-based Eli Lilly as well as its misfortunes navigating the US regulatory system. I also watched Ursula von der Leyen visit Trump in the White House to graciously accept his EU tariffs. It’s already been clear that China has begun to maul European industry. What the Novo Nordisk news made me appreciate was that American companies are comprehensively outworking their European counterparts in biotech in addition to software and finance. Europe is losing the two-front battle against the Chinese on manufacturing and the Americans on services.

Perhaps Europe could have recruited some professors from the United States. American academics wouldn’t have needed Trump’s insults to act on their Europhile impulses. And yet European initiatives have not yet been able to brain drain much of this class. That’s mostly because European governments have little funding to offer. European universities have failed to build substantial endowments, so their revenues are dependent on the taxpaying public, which also must support a million other initiatives. An American academic who wants to move to Europe would have to accept more teaching and administrative work, lose tenure, and for the pleasure of all that, probably halve her pay. She would likely also suffer the resentment of European peers, who scoff at the idea that better paid Americans are now refugees. Trump threw a lot against US universities; they are holding up okay, and I think they will remain strong.

Europeans are right to gloat they are not under the rule of Trump. But for all of Trump’s ills, I see him as a sign of the underlying dynamism of the US. Who else would have elected so whimsical a leader to this high office? Trump forces questions that Europeans have no appetite to confront, proud as they are in being superior to both Americans and Chinese. I submit that Europeans ought to be more circumspect in their self-satisfaction. Chaos is only one election away. Right-populist parties are outpolling ruling incumbent parties pretty much everywhere, and it is as likely as not that Trumps with European characteristics will engulf the continent by the end of the decade.

So I am betting that the US and China are more compelling forces for change. Stalin was fond of telling a story from his experience in Leipzig in 1907, when, to his astonishment, 200 German workers failed to turn up to a socialist meeting because no ticket controller was on the platform to punch their train tickets, citing this experience as proof of the hopelessness of Germanic obedience. Could anyone imagine Chinese or Americans being so obedient? One advantage for the US and China is that both countries are at least interested in growth. You don’t have to convince the elites or the populace that growth is good or that entrepreneurs could be celebrated. Meanwhile in Europe, perhaps 15 percent of the electorate actively believes in degrowth. I feel it’s impossible to convince Europeans to act in their self interest. You can’t even convince them to adopt air conditioning in the summer.

The personal is the geopolitical

I’m not a doomer on AI or the broader state of the world. Across the US, China, and Europe, people generally enjoy comfortable lives that are free from fear. The market goes up. AI tools improve. Over the years I lived in China, I knew that life was more mundane than the headlines made out. Now that headlines and tweets are more negative everywhere, I know that things are not so bad in most places.

What I want is for everyone to do better. I opened my book by saying that Chinese and Americans are the most alike people in the world. They both are driven by a yearning for the future. They feel the draw of better times ahead, which is missing for Europeans, those people who have a sense of optimism only about the past.

I believe that modern China is one of the most ahistorical nations in the world. The state and the education system may talk insistently about its thousands of years of continuous history. But no other society has also been so destructive of its own history. The physical past has been disfigured by the attention of the Red Guards and the inattention of urban bulldozers. The social past is contorted by outrageous textbooks, which implement enforced forgetting of major traumas. For tragedies too widely experienced in modern times to be censored — the Cultural Revolution, the one-child policy, Zero Covid — the party discourages reflection in the name of protecting the state’s sensitivity.

The United States isn’t so good at celebrating its history either. 2026 is the 250th anniversary of the country’s founding. Where are the monuments to exalt that history? Most of the planned celebrations look small bore. Why hasn’t the federal government built a technological specimen as sublime as the Golden Gate Bridge, the Hoover Dam, or the Apollo missions? Probably because planning for any project should have commenced 10, 20, or 30 years ago. No president would have gotten around to starting a project that has no chance of being completed in his term. Lack of action due to the expectation of long timelines is one of the sins of the lawyerly society.

But American problems seem more fixable to me than Chinese problems. That’s why I live here in the US. I made clear in my book that I am drawn to pluralism as well as a broader conception of human flourishing than one that could be delivered by the Communist Party. The United States still draws many of the most ambitious people in the world, few of whom want to move to China. Even now a significant number of Chinese would jump to emigrate to the US if they felt they could be welcomed. But this enduring American advantage should not excuse the US from patching up its deficiencies.

A light grab-bag of complaints: While the rich have access to concierge doctors and the world’s best healthcare, the United States cannot organize a pandemic response; it is bioprosperity for the individual and measles for the many. I learned recently that the Bay Area has 26 separate transit agencies; is it really a triumph of democracy to have so many unconsolidated efforts? I wonder whether we can accuse the California government of subverting the will of the people by making so little progress on its high-speed rail, which was approved by referendum in 2008; California rail authorities take more pride in creating jobs than doing the job. I am tempted to use the language from American foreign policy at home. Why talk about American credibility only in terms of combat? Why shouldn’t the failure to deliver on big projects, after spending so much money, constitute a more severe blow to the credibility of the American project? Is the state of