All language subtitles for NOVA S50E16 Inside Chinas Tech Boom 1080p WEB h264-BAE_track3_[eng]

♪ ♪

♪ ♪

KAISER KUO:
Is China becoming
the world leader in technology?

KELLY SIMS GALLAGHER:
The United States and China

are locked
in a big power struggle.

Innovation creates global power.

KUO:
Over the last 40 years,

China has had
an unprecedented economic boom.

SILVIA LINDTNER:
To understand how China
innovates is to rethink

what innovation means
in the first place.

(man giving order in Chinese)

KUO:
They became the manufacturer
of the world--

tinkering, innovating,

and even stealing the lead
in some areas.

PAUL SCANLAN:
Why was China successful
with 5G?

It got the message
of what could 5G do,

from healthcare,
education, manufacturing.

(speaking Mandarin):

huge corporations like Huawei
have spread their wings.

JAMES MULVENON:
It was their successes,

particularly in 5G technology,

that are
really leading the way

and are causing us to have
to play catch-up to them.

KUO:
Today, a tech war

between China and the West
is starting to heat up.

♪ ♪

What does it mean for China

and the rest of the world?

"Inside China's Tech Boom,"

right now, on "NOVA."

♪ ♪

♪ ♪

KUO:
This is the big annual meeting

for the builders
of the global internet.

Tech companies
from all over the world

have come here,
to Barcelona, Spain.

And the biggest delegation

is from the Chinese tech company
Huawei.

Everybody in the world
is talking about 5G.

it feels like Huawei is top dog.

They have the biggest pavilion
and the most sales and patents

in the next-generation
internet tech called 5G.

They're also just
one of many Chinese tech giants

taking over global industries:

solar power,

wind power, drones,

batteries--

all fields
where Chinese companies

have taken the lead
in innovation.

How is China doing it?

By copying others,

or are they finding their own
innovation secret sauce?

Could they even surpass the U.S.

as the world's
leading innovator?

♪ ♪

("The Internationale" playing
with Chinese lyrics)

These are questions
that I've discussed

time and time again.

Welcome to the "Sinica Podcast,"

a weekly discussion
of current affairs in China.

(voiceover):
I'm Kaiser Kuo,

a journalist and podcaster.

I live in the States,
but for 20 years,

I lived in China.

I was comms director at
one of their biggest tech firms

and guitarist in
China's first heavy metal band,

Tang Dynasty.

("The Internationale" continues)

(holding final note)

(song fades)

Oh! Hi.
Hey, how are you?
Good to see you.

Welcome, yeah.
It's been a while.

Good to see you.
Yeah, I'm looking forward
to this.

KUO: When I interview people
for my podcast,

I find no shortage of different
takes

on the rise of Chinese tech.

The entire Chinese tech
landscape

and business landscape,

I think that's actually
getting stronger

year on year.

A major misunderstanding

that Americans might have
about China

is that it is mostly focused
on lower-value work

But China has
mostly transcended that.

PAUL TRIOLO:
China is really the only

peer competitor of the U.S.

that has companies competing

across the technology sector.

China is beating
the United States

in tech-heavy industries.

It accounts for a third of
global output

in knowledge-intensive
industries,

KUO:
Today, it might be surprising

to think of China
as a technology leader.

But for much of history,
China was the world leader

in science and innovation.

In fact, the shame
of losing this position

and the dream
of regaining it

were major motivations

for the founders of
the Chinese Communist Party.

It all started with
a widespread national awakening.

REPORTER:
3,000 students gather
in front of Tiananmen

on 4 May, shouting, "China
is for the Chinese people."

So to many Chinese,

they saw science and technology

as a way of national
rejuvenation

and national salvation.

And it became
a foundational principle

of the modern Chinese state.

KUO:
Advancing science and technology

truly became a national
obsession in 1978,

with the rise of the then
Chinese leader, Deng Xiaoping.

♪ ♪

REPORTER:
A new beginning
in U.S.-China relations.

KUO:
Deng opened China to the world

so it could learn
foreign technology.

His market reforms
helped lift

over 700 million people
out of poverty.

That's more than twice
the population of the U.S.

But this was only part
of Deng's plan.

Another goal was to reclaim
China's historical place

as world leader in science and
technology within a generation.

So, more than
four decades later,

how is Deng's plan going?

To many Chinese, there is
no better example

of success than the tech giant
Huawei.

But it's also at the center
of a storm of accusations

of intellectual property theft

and ties
with the Chinese government.

With all the controversy,

it's really easy
to overlook something.

This company does innovate,

and it does it
in a very different way

than we do in the West.

WANG WENJUN (speaking Mandarin):

♪ ♪

KUO:
The first thing you notice

when stepping onto a Huawei
campus is its style:

Renaissance architecture,

marble statues,
European luxury.

It's all unmistakably Huawei.

But despite the Disney vibes,

it's the perfect place
to start exploring

how Chinese tech companies
innovate.

So, this is our library.

KUO:
Paul Scanlan is Huawei's
chief technology officer.

He was drawn to China
from abroad to work in tech

in part because
he was impressed

by Huawei's massive investment
in research and development.

SCANLAN:
Why I love the company,
it's very simple.

It's a platform

that allows me to take
a lot of the ideas I have

to the world.

The platform is
an R&D platform.

We spend more than 22%
of our gross revenue on R&D.

KUO:
That makes Huawei

one of the world's largest
corporate spenders

on research and development.

They've set more
technical standards

than any other organization
in the world for 5G.

5G is an advanced wireless
communication technology.

Because it operates at
higher frequencies than 4G,

it can be up to
100 times faster

and also more reliable.

It also hasn't really
been fully deployed yet,

but in the small town
of Zhenyuan,

we can start to see
what it can do.

With 4G,
our cell phone towers

connect mainly to our phones,

and there is a limit to
how many devices

any one tower
can handle at a time.

5G is a dramatic improvement

that promises to connect
all sorts of devices

wirelessly to the internet,

and in much greater numbers.

In wireless communications,

data is transmitted
by radio waves.

As you progress from 3G,

to 4G,
to 5G,

the frequency of the radio waves
becomes higher and higher.

This allows more data
to be carried,

enabling faster download
and upload speeds.

This is a big deal,

because so much of tech

depends on internet
infrastructure.

As 3G progressed to 4G,

increased data loads
enabled simple phone calls

to progress
to ride-hailing apps,

food delivery apps,
video conferences--

the list is endless.

Increased data loads
help build

the so-called
internet of things,

allowing devices
to talk to devices,

like cars talking to cars,

or machines in a factory

coordinating to become
fully automated.

SCANLAN:
Why was China successful
with 5G?

It got the message
of what could 5G do.

It got the message that,
if I can provide connectivity,

I can collect data--
information.

from healthcare, education,

manufacturing, okay?
Across all of the sectors.

It understood that urgently.

Huawei is a genuinely
impressive, state-of-the-art,

world-class telecoms equipment
manufacturing company.

that are really leading the way

and are causing us to have to
play catch-up to them.

♪ ♪

WENQI FANG (speaking Mandarin):

LIPING WEI:

♪ ♪

(translated):
What's being installed right now

is a new 5G antenna.

It supports a very wide range
of frequencies,

♪ ♪

KUO:
China is deploying 5G

at a scale greater than
any other place in the world.

China's exceptionally good at
developing infrastructure,

whether it's, you know,
5G infrastructure

or electric grid
infrastructure,

or electric vehicle
charging infrastructure.

It has this ability to
do good planning

and then also to execute.

KUO:
Authorities in China
are pushing 5G hard,

turning
difficult-to-connect places

like China's mountainous
Guizhou province

into laboratories for
Huawei's 5G applications.

(Yang Chengyu speaking Mandarin)

(translated):
Out here in the mountains,

the internet has always
been poor.

A little bit of bad weather,

a little bit of wind,

no internet.

It was really hard to get
a signal.

But it has changed recently.

Now, with 5G,

we've started doing
smart farming.

♪ ♪

KUO:
5G technology

is able to make
stronger connections

and transfer more data

to more points.

This enables places
like this tea farm

to deploy wireless sensors

in hard-to-reach places.

(speaking Mandarin)

(translated):
This tea plantation has really
embraced smart farming.

It's been quite useful for
our agricultural management.

These sensors all help us
predict the humidity,

wind conditions,
and temperature.

♪ ♪

KUO:
More data leads to
better modeling

and better crop yields.

Processing the information
fed to it through 5G,

a smart farming system
can alert farmers

to the optimal times
to remove weeds,

plant seeds, and harvest crops.

But this is just
the beginning of what 5G can do.

What I've seen in China

is 5G completely changing
the way people live and work,

even in seemingly low-tech
traditional industries.

Across the country,

more than two-and-a-half million
people

are employed in coal mining.

It's dangerous work,

known for frequent accidents
and fatalities.

(translated):
This is the main shaft
of the mine.

It's a dark place
with thick air.

It's also the most
dangerous place in the mine.

KUO:
One of the problems

is the inability
to control machinery remotely.

It's impractical
to connect using wires,

meaning workers have needed
to be perilously close

to their machines
at all times.

5G is capable of bringing
digital connections

into deep underground crevices,
such as this one,

allowing the facility
to become completely automated.

Previous 4G systems
beamed data inefficiently,

in all directions.

5G is much more precise.

We can make beams simultaneously

that can be a little sliver
going this way,

or we can have a
little sliver that way,

or we can have
multiple ones that way,

or multiple ones this way.

And it can extend the distance,

or it can provide more capacity,

or it can follow
somebody or something.

KUO:
China says its goal
is to ultimately

move away from coal and
into cleaner forms of energy.

5G is a critical part of
this plan, as well.

This is the Dingzhuang
floating solar farm.

Across a large swath of sea
are endless solar panels,

each requiring monitoring.

The plant's
expected total output

is 550 million
kilowatt-hours per year.

That's enough to power
52,000 typical American homes.

SCANLAN:
You have tens of thousands
of photovoltaic cells,

and 5G can monitor information
from them

more efficiently
than anything else can.

(alarm blaring)

KUO:
China's national
5G infrastructure

gives a built-in advantage
to this large-scale solar farm.

Solar panel technology is
prone to malfunctions,

and one problematic panel

can shut down an entire grid.

5G enables each panel
to constantly send data

to a central command station,

making inspections
more efficient

and saving labor costs.

♪ ♪

And a solar farm can scale
to a size

that wouldn't be possible
otherwise.

I can now monitor them

to see whether they're failing

or when they're going to fail,
so I can optimize

that prediction of maintenance
for these farms.

KUO:
And there's another
unexpected benefit here.

The shade from the solar farm

actually cools
the surrounding water,

helping create
an ideal environment

for farming shrimp
and other seafood.

But all of this is possible
because the Chinese government

sees the advantage of
creating a web of connectivity

across the entire country,

and is willing to use
its central authority

to make it a reality.

5G cellular technology

is really sort of a major leap.

And it really is more of
the high-tech future

that we've seen
in the movies and in sci-fi

in which we're surrounded
all the time

by, you know,
really high-speed data

and the ability
to exploit all of that.

And that just basically means

5G will enable

much more precision-based
applications.

KUO:
Driverless cars,
automated ports and factories,

next-generation A.I.

What all of these things
have in common is

that they can't fully develop

until 5G infrastructure
is built.

And, as with most
new infrastructure,

we don't yet know
how it will change society,

for better or worse.

(people talking in background,
robot whirring)

KUO:
Why is it that a Chinese company

is leading the way
in building

the next generation
of the internet?

♪ ♪

There's no doubt

that the Chinese Communist Party
uses its central authority

to force change in ways
that aren't possible

in Western democracies.

But another key reason

is the intense work culture.

It can be brutal,

with six-day weeks
and 12-hour days

being the norm.

Despite it all,

when I worked in Chinese tech,

I still found something
energizing about it.

(speaking Mandarin)

(phone alarm ringing,
phone vibrating)

KUO:
Junior associates
Niu Yehan and Long Yin

are currently taking part

in Huawei's brand of
basic training.

Here, all new employees,
even office workers,

must learn the art of
deploying 5G base stations.

NIU (speaking Mandarin):

(speaking Mandarin)

KUO:
They train for a variety of
terrain, from urban centers

to the kind of remote mountains

that Guizhou province
is known for

and that Huawei
specializes in reaching.

WANG WENJUN
(speaking Mandarin):

NIU (speaking Mandarin):

LONG:

(both laugh)

(murmurs in Mandarin)

MAN (speaking Mandarin):

Western observers

often call the Huawei
company culture militaristic.

That's probably
part of the story.

But there's also something else.

Huawei tries
to motivate its employees

in ways that probably
would not fly

in Western industry.

Wang Wenjun leads the training
for new recruits.

(translated):
This is our training area.

I think it's different
than the training facilities

in most other companies.

Our facilities are outdoors,
on top of a mountain.

♪ ♪

This slogan...

Uh, how would I translate it
for foreigners?

"If you want to take more
responsibilities,

KUO:
I look at these slogans

and think about how
out of place they would seem

at a Western company.

The messages are about
enduring hardships

and winning battles.

Huawei was
founded by Ren Zhengfei,

who started his career
in the Chinese army.

He then went on to found Huawei,

whose name literally means
"Chinese achievement."

♪ ♪

What I find interesting is
how the posters around campus

echo the propaganda style

of the Chinese government.

They talk about the
importance of sacrifice

and hard work in aiding China's
technological development.

A lot of what Beijing
tries to do is

that it's trying to use ideology

in China to pursue the goals

that it really wants to have.

(Wang Wenjun speaking Mandarin)

(translated):
My job is to train
the young people

to develop the spirit
of bitter struggle,

to train everyone
to become full with vigor.

Only when you have suffered

can you understand
the sweet things in life.

People live good lives now.

They never have experienced
the struggle.

The point of this place
is to give them a taste of that.

XINYAN YU
(speaking Mandarin):

NIU:

YU:

MAN:

KUO:
The people here train
to connect not just China,

but every corner of the world.

This is in line
with Chinese state goals,

which seek to export
Chinese technology globally.

GALLAGHER:
In countries in Africa,

you will mostly see

Chinese equipment everywhere.

I was recently in Ethiopia,

and I was struck,

because I kept having
this out-of-body experience.

I felt like I was in China.

The subway
was constructed by China.

The subway cars
have Chinese words in them.

The United States is
not visibly present

in a lot of developing
countries around the world.

KUO:
By 2017,

Huawei was bringing 5G
and its applications

to the entire world,

and then the U.S. government
started to take notice.

♪ ♪

CHUCK SCHUMER:
Huawei and ZTE are both
state-backed companies.

Their efforts to enter
the American market

is a great example

of how China attempts
to steal our private data

and intellectual property.

KUO:
In 2018, Huawei CFO
Meng Wanzhou,

the daughter of founder
Ren Zhengfei,

was apprehended in Canada

under suspicion
of violating U.S. sanctions.

(Hua Chunying speaking Mandarin)

(translated):
The whole world sees this
for what it is.

America is trying to strangle
China's high-tech companies.

KUO:
In May 2019,

the U.S. government
placed Huawei

on the so-called Entity List,
a register of companies

that are effectively banned
from doing business in the U.S.

James Mulvenon
is one of the architects

of this policy change.

MULVENON:
The day that Huawei
and its subsidiaries

were placed on the Entity List
was frankly

a day of real sense of
personal accomplishment for me.

I had been writing about Huawei
for 25 years

and informing
the U.S. government

about many different features
of Huawei's relationship

with the Chinese military,
with the Chinese government,

its activities abroad

that I thought were
suspicious and questionable.

A country is always going
to be extremely protective

of its telecommunications
infrastructure.

It is the way it maintains
control over its territory

and connects its leaders,
its police forces, its military,

and, during the Cold War,

was the way in which
the United States government

maintained command and control
over weapons that could have

destroyed the world
hundreds of times over.

KUO:
Mulvenon contends that while
there hasn't been any proof--

nothing in public, at least--
of Huawei's spying in the U.S.,

there is no way of ensuring
a Chinese company's

independence from Beijing.

To protect against this threat,

the U.S. government
has mandated

Huawei equipment
across the country

be ripped out and replaced.

In the town of
South Canaan, Pennsylvania,

local telecom company
C.E.O. Jim Kail

is overseeing the removal
of Huawei equipment

from the internet
infrastructure.

But now,

he faces a new problem:

alternate equipment
is three times more expensive

than Huawei's.

Without Huawei,

there is no cost-effective way

to connect this region
to the internet.

KAIL:
Our allegiance is to
our own country here,

and that's very important.

I take that very seriously.

And I'm, the rest of us,
as rural Americans,

we're patriotic.

And yeah, so we, we did think
long and hard about that

before we made that decision.

You know, over the course

of the last couple of years,
in particular,

there was the, the push
to, to ban the product, and...

Which eventually
led to the mandate

where we had to rip
and replace.

And we're now in
the process of doing that.

We're taking, swapping out

the Huawei solution with a,
with a different solution.

And actually, that,
when you think about it,

it's actually a windfall
for China, right?

So, you're actually
taking equipment out there,

you're ripping it out,
and you're going out

and buying new equipment, right?

Buying it from China, right?

I mean, you know, it's,
it's the vendors,

the vendors
we do business with,

theyey're getting their parts
from China,

and so China is getting
a windfall out of this.

KUO: For many observers
in America,

the most challenging
thing about Huawei

is that they can make products

that no Western firm

has been able to replicate,

especially when it comes
to cost.

And, without Huawei,
there is simply

no cost-effective way
right now

to build 5G
across much of America.

Something that lawyer
Eric Atria discovered

when he and his family
moved to rural Florida.

We moved out here
and found out

that there literally wasn't
internet out here.

We couldn't get any internet.

And the only place in our yard

that we could actually get
one bar of service

fr our cell phone provider
is this log.

So, my wife called it
"logging on."

And you only get one
bar of signal standing here.

So, my wife was out here
the other day,

holding her phone in the air
as a personal hotspot

and her laptop
in the other hand,

so she could
do a work meeting.

♪ ♪

Actually not working!

KUO:
The United States

has only built about
100,000 5G base stations,

compared to the
over two million in China.

CHILD:
Now it's working.

KUO:
Why is China so much more
successful at creating

affordable
cutting-edge tech?

SEOW:
So, historically,
a country's capacity to produce

was itself viewed as innovative.

So, in imperial times,
China's capacity

to produce these, you know,
wonderful goods, this porcelain,

this silk,
was awe-inspiring for those

who were able to, to view them,
to see them.

And it's only closer
to our present

where we see this distinction

between innovation
and production.

DAN WANG:
China is a place where
R&D and manufacturing

are very
tightly linked together,

where the knowledge can really
circulate and be kept alive,

it can be practiced,
it can be made better.

And that is something
where the U.S. has fallen behind

pretty substantially
over the last five decades.

KUO:
Shenzhen is the manufacturing
epicenter of China.

It's also the hometown

of most of the Chinese
tech giants, including Huawei.

♪ ♪

So Shenzhen was declared
famously by Deng Xiaoping

KUO:
Before 1979,

Shenzhen was a small fishing
village of 30,000 people.

Then it was designated China's
first

special economic zone--
an experiment with capitalism

that set it apart from the
centrally planned economic model

in the rest of the country.

From the beginning,

authorities viewed mastery
of manufacturing

as key to innovation.

Flash-forward to today,

Shenzhen is the manufacturing
powerhouse of the world.

(Gao Jialin speaking Mandarin)

(translated):
In 1997,

there were many
foreign investors here.

Lots of foreign capital was
flowing into China,

and this gave us
lots of opportunities

to learn and improve ourselves.

A lot of people from all over
China, from Europe,

from the United States, and from
many other parts of the world

came to Shenzhen

to implement technology
production in new ways.

KUO:
To walk around Shenzhen

is to see a tech hub
which is very different

from Silicon Valley's
software startup culture.

At the center of it all

are the factories
and the art of making.

Makerspaces are everywhere,
where people produce,

tinker, hack, and, most
famously, copy foreign tech.

DAN WANG:
A lot of developing countries
got to be richer

by copying and, indeed, stealing
from advanced countries.

That was the case

when the United States
was a major I.P. violator

back in the 19th century,

mostly from the United Kingdom.

KUO:
Zhang Jiuzhou is a
product designer in Shenzhen.

He challenges the whole idea
of what I.P. theft means.

(speaking Mandarin)

(translated):
A lot of people talk

about knock-off products
in China,

like all the fake iPhones
made here.

which means
learning and evolving.

Something that's associated
with intellectual property,

with patents, arguably with a
very Western-centric definition

of what counts as innovation,

which is often rooted in this
idea of,

that there's an authentic,
original,

charismatic technology creator
who came up with this fantastic,

completely novel idea

that's revolutionizing
a whole industry.

And we don't
really think of something

like modification

or slow-paced change as
innovation.

And so what I think
is really important

for us to understand
how China innovates

is to rethink what innovation
means in the first place.

DAN WANG:
There is a more important
part of technology,

which is something I call
process knowledge,

which is simply the experience,
the tacit knowledge,

the understanding
of how to make something.

And so, in the kitchen context,

if you put someone into
a super-fancy kitchen

decked out
with really fancy gadgets,

as well as extremely clear
recipes,

I think that person would have
a hard time

doing something as simple as
frying an egg

if he hasn't had some cooking
experience in the past.

KUO:
The kitchen analogy
seems like a good one to me.

In my years
working in tech in China,

I saw it become
the workshop of the world.

Like a nation of busy chefs,

China was making things
at turbo speed,

building world-class skills.

But then something else
started to happen.

They started
experimenting in the kitchen.

As there was increasing
clustering

of manufacturing centers
around different industries,

a lot of learning occurred.

I remember going through
a factory

in China, and one of the ways
they had been able to cut

the cost of the solar panel
was to figure out a way

to slice the ingot more thinly.

China is masterful at these
types of process innovations,

and, over time, also began

to really gain
innovation capabilities.

KUO:
The spaces where China
has world-leading tech

tend to be the places

where China holds
manufacturing dominance.

Chinese battery companies
make 77%

of the world's batteries.

China's firms produce 80%

of the components
in solar panels.

Huawei followed a similar path.

After producing
telecom equipment

for foreign companies for years,

their manufacturing experience
helped them develop

better and cheaper products.

If China had never become
the workshop of the world,

I doubt we'd even be talking
about Chinese tech giants.

DAN WANG:
And a lot of the manufacturing
workforce in China has expanded

very significantly, in part
at the expense of the U.S.

As we see from COVID-19,

a lot of the U.S. manufacturers
in its early days

struggled to make something
as simple as masks for people,

as well as
cotton swabs for testing.

The contrast that we see
in China is

that manufacturers were able
to respond really quickly.

KUO:
Manufacturing dominance creates
spillover advantages

for Chinese entrepreneurs,

advantages that show up
in unexpected places.

KEVIN PAN (translated):
In 2014,

I built a ten-megawatt
Bitcoin mine

in the Inner Mongolia province.

At that time, it was one
of China's largest facilities.

Now, in 2021,

I'm building the same kind of
facility here in the desert.

(speaking Mandarin)

(translated):
Except this time around,
it's 60 times larger.

It's like coming full circle,
just in a new location.

KUO:
Kevin Pan is the C.E.O.
of Poolin,

one of the largest Bitcoin
mining operations in the world.

A Bitcoin mining facility
is similar to a data center.

Powerful computers operate
24/7 to run the Bitcoin network.

For security,

the network depends
on the participation

of computers
scattered around the world

to collectively
keep track of Bitcoin ownership.

The system issues Bitcoins
to participants

by rewarding those who solve
complex cryptographic puzzles,

an activity that requires
huge amounts of electricity.

Bitcoin mining was once
dominated by U.S. miners,

but, as so often happens,

China was quick
to get into the game,

and grew to hold as much
as a 75% share of the industry.

I'm especially interested
in asking Kevin what he thought

gave China that edge, in this
and in so many other areas.

(Pan speaking Mandarin)

(translated):
It's almost unfathomable
how quick

the supply chain is in Shenzhen.

In America, it takes days

to receive prototypes
for your designs.

In Shenzhen,
if you send blueprints

to a factory in the morning,

they'll deliver
a prototype by the afternoon.

It's a paradise
for any entrepreneur

working with hardware.

In other places,
you just can't do this.

Only in Shenzhen.

KUO:
Kevin built his massive Bitcoin
operation in China.

And then the hammer came down.

China's Central Bank cracked
down on cryptocurrencies,

calling all crypto-related
activities illegal.

It happened around the same time
as a wide-ranging tech crackdown

that also hit social media
companies

and online loan providers.

As powerful
as the Chinese government is

when it comes to rapidly
deploying infrastructure

like 5G,
it can be equally harsh.

And, essentially,
with the same stroke of a pen,

it banned Kevin's entire
industry,

citing the environmental
consequences of Bitcoin mining.

(Pan speaking Mandarin)

(translated):
Ever since we got shut down,

the company's
been in a tough position.

KUO:
So, what happened to Kevin?

Turns out he wasn't
about to give up so easily.

He just pulled up stakes
and started over in a new home.

Where he has been welcomed
with open arms.

I love Bitcoin because it's,
it's bringing freedom to people.

You can protect
your own assets.

And nobody won't...

Nobody could, ever, ever
could took it from you.

MAN:
So, where does it
actually exist?

It's on the internet.
(chuckles)

KUO:
Kevin's not alone
in jumping ship.

Many entrepreneurs caught
in Chinese tech crackdowns

have relocated to America.

They're here because
the Chinese government

takes an active role
in steering innovation.

Policymakers funnel
talent and money into industries

they view as important.

At the same time,

they shut down industries
they view as wasteful,

risky, or frivolous.

PAN (translated):
When China shut us down,

we immediately complied
with the law.

But in our hearts,
we felt hopeless.

We spent so long
building so much,

and it was all torn down
in a single night.

We either had to give up
or start from scratch.

KUO:
Today, Kevin and his team

of Bitcoin miners are meeting
with Kenneth Winkles,

head of a local economic
development organization.

Good to see you again,
sir.

How many total
megawatts will you be utilizing

once you're up and running?

Yeah, this one
is about 100 megawatts.
Okay.

WINKLES:
I don't believe
that what happened in China

will happen in the United
States, I really don't.

We've got a very stable

type of government, whether
you're a red or a blue state.

You happen to be in a red state.

Texas is business-friendly,
so you're not going

to see somebody come in and say,

"No, you can't do that
in my backyard."

Yeah.
Okay.

KUO:
Crypto was banned in China

because the Chinese state uses
its strong central authority

to guide innovation

as it sees fit.

But is it just driving out
the disruptors

and original thinkers needed
to foster true innovation?

There's no shortage
of strong opinions.

I've seen many times
in Chinese bookstores,

there are many, many books in
those bookstores that say,

"Where is China's Steve Jobs?"

And so, I do believe ultimately

that it's the combination
of the American free market

with our democratic system

that ultimately is best
for fostering innovation.

Beijing's vision
of the technological future

is a little bit different
from California's.

In its view,
a lot of social media companies

are actually creating
a lot of social unrest.

And frankly, it doesn't see

a great use for crypto currency,

which is almost explicitly
designed

to be out of state control.

There are certainly efforts
by the government

to redirect talent and capital

toward so-called
hard tech sectors,

such as climate tech, such as
electric vehicles, et cetera.

KUO:
China's government
guides innovation into areas

that it deems important.

But can a single institution

always choose the right winners?

Either way,
it does seem to be working

for a number of key industries.

And the Chinese model
of a heavier state hand

seems to be gaining influence
worldwide.

The challenge of competing
with China has caused people

to reassess whether
the market alone can create

and mobilize the resources for
innovation in the United States.

And the belief,
I think, is that it can't,

especially when you're competing
with a country

where the government
has been able to mobilize

such vast sums of resources
in the same areas.

KUO:
And so the U.S. government has
put its own thumb on the scale

with the 2022 passage
of the CHIPS and Science Act,

injecting public money

into the semiconductor industry.

Today's computer chips
are easily

the most complex devices
ever made,

and they're also seen now as
a critical strategic resource.

Besides trying to jump-start
domestic production,

the U.S. and the West are
also trying to keep

the means of production
out of China's hands.

DAN WANG:
Without advanced semiconductors,

there is no way
that China can have

a thriving
technological industry.

China is now out of the starting
gate in semiconductors,

but in the most rosy view,
it is probably

at least five to 15 years
behind the U.S.

in terms of the most crucial
semiconductor technologies.

KUO:
Computer chips are solid pieces
of silicon and metal

with literally billions
of tiny electronic switches

packed into a very small space.

Since the 1970s,

the key to increasing the power

and speed of computers has been
tied directly

to the density
of those switches.

As they've shrunk down
to the atomic scale,

the technology required
to make them

has become increasingly costly
and complex.

Pushing the envelope
of chip innovation

is like building a pyramid.

Everything rests
on what came below.

And China's pyramid
is really just getting started.

MULVENON:
One of the most dramatic
consequences

of the trade war with China

was the exposure
of China's dependence

on high-quality and high-end
semiconductor chips

from the United States and Japan
and Korea and Taiwan,

and I would say right now

that catch-up
in the semiconductor space

is probably the single greatest
challenge

that the Chinese technology
sphere currently faces

and the, the highest hill
that they have to climb.

KUO:
This is a Huawei cell phone
factory.

Just a few years ago,

Huawei was on track to become
the leading maker

of mobile phones in the world.

Then the U.S. government
cut off their access

to advanced semiconductors.

DAN WANG:
Huawei has had
a lot of different problems

with trying
to maintain production.

There's simply no way to be
a major technology provider

if you don't have the most
advanced semiconductors

Huawei's revenues
have collapsed,

mostly because its smartphone
business has collapsed.

It was, at, for one period,

the second-largest smartphone
maker in the world.

Today, it is just barely in
the running

for being the top tenth largest
smartphone makers in the world.

KUO:
In Chandler, Arizona,

I visit an Intel semiconductor
factory, also known as a fab.

Here, Intel is building

a new state-of-the art facility.

♪ ♪

If any one place
represents the front line

of the tech war today,
this is it.

HUGH GREEN:
Welcome to Fab 42.

You're in one of
Intel's most advanced factories.

with a lot of different people

doing various activities.

KUO:
Semiconductors process the data

that run through digital
devices.

GREEN:
We start our process
with a bare silicon wafer.

It looks like a pizza,

300 millimeters in diameter.

KUO:
Digital electronics
work by processing our voice,

the videos we watch,
and the data we collect

into a binary code

that can be transmitted
between us.

This is the language
of computers and the internet.

What creates this code
are switches called transistors.

At the heart of computers today

are tiny wafers of silicon

that can hold more than
100 billion transistors

in just a few square
centimeters.

The switches
of today's computers

are only a few atoms wide,

only visible under an electron
microscope.

Arranged by millions
of minuscule networks,

they look like farmland

viewed from 30,000 feet.

The connections between them
are just as tiny.

On this package itself,

there are 1.1 million
interconnects.

And of those interconnects,

about 980,000 of those
interconnects

are at Intel's state of the art.

KUO:
The mindbogglingly complex
layout

of these impossibly small
components

is printed onto the silicon
by lithography,

using focused ultraviolet
light waves

that are just 13-billionths
of a meter long.

Atom by atom,
different metals are deposited

by machines of
almost unimaginable precision.

KEYVAN ESFARJANI:
Building these chips
requires an infrastructure.

It requires factories.

Even though the chips are very,
very tiny,

the factories that build them

are quite, you know, elaborate.

You have clean rooms
that are 10,000 times cleaner

than where you do heart surgery.

KUO:
Each new generation
of fabrication machinery

is an advance
on what came before it.

Starting in the 1970s,
Moore's Law predicted

that chip technology
would improve so rapidly

that the number of transistors
on a chip

would double every 18 months.

This has held mostly true
so far,

making it almost impossible

for newcomers to the game
to catch up

without relying on equipment
produced by just a few

standard-setting companies.

ESFARJANI:
Imagine you have billions
of transistors

on a, you know, your fingernail.

If a small defects,
and I mean small defects,

being, like, like, a size
of a, you know, molecule,

or even a DNA,

the whole thing breaks apart.

KUO:
This Intel fab
is unique for America.

It's a little bit
like the Chinese model,

with research and development
groups embedded

within full-scale
manufacturing facilities.

I asked
researcher Rahul Manepalli

what he ought
about the connection

between manufacturing and R&D.

MANEPALLI:
What is lost when we

do not do R&D and manufacturing
in-house?

I think that's, it's probably
a longer-term view

you got to look at.

When you stop
doing manufacturing,

it's not the immediate
generation,

but the next generation
of products

you lose your expertise in,
and over time,

you can lose expertise

in critical skills
that are required

to advance the technology.

KUO:
It's not a stretch to say
that here,

the U.S. is relearning a lesson

that China
is already committed to.

It's a reminder
of what America may have lost

in allowing the decline

of its own manufacturing sector.

But it's also a testament
to some of America's strengths.

MANEPALLI:
We have about 100 PhDs
working in this facility,

and we, we do care
about diversity--

diversity of thought,

diversity of opinion,
diversity of views.

KUO:
As I look around,
I see top scientists

from many countries
working here.

They come from Europe, India,
and even China

to provide
different perspectives

on how to solve
difficult problems.

This is something
that I never really saw

in Chinese research labs,

and it's one of the many reasons

why Chinese companies are
having such a difficult time

catching up in semiconductors.

In this facility,
the most cutting-edge

lithography machines
are from the Netherlands.

The chip designs are from
California.

come from all over the world.

Producing something
as complicated

as a semiconductor requires
international cooperation.

There isn't a country
in the world

that can do it alone.

But now, China will have to try.

In late 2022,
the U.S. government expanded

its tech war on China.

New regulations forced
all Americans

working in the semiconductor
industry

in China to resign
or renounce their citizenship.

The restrictions
are only expanding in scope.

What started as an attempt

to choke select companies
like Huawei

seems to be expanding to
the entire Chinese tech sector.

So it was a very comprehensive
set of rules

designed, really, to, to allow
the U.S.

across the semiconductor
manufacturing space.

And so, China...
(chuckles)

...um, faces a really
significant problem.

No country has ever attempted
to recreate, for example,

all the pieces of
the semiconductor manufacturing

supply chain on its own.

KUO:
Back at Huawei,

the company is on a war footing.

Cut off from the technology
it needs

to power their products,

they know
they need to move fast.

The way the Chinese
typically respond

to efforts like that is,

they redouble their efforts
to innovate internally.

(speaking Mandarin)

(translated):
As you may know,

our supply of semiconductors
was choked off.

We can't make them.

But I can feel it.

The whole of society is working

to find a way out
of this problem.

Of course, here in this lab,

we are focused
on our own problems.

But you could say we're working

on the fundamental problem
this country faces.

(speaking Mandarin)

(translated):
How do we get
around the pressure

that has been put on us?

Is another route possible

that doesn't rely
on semiconductors?

KUO:
In the Huawei R&D labs,

researchers study how to use
light to process data,

rather than
using traditional chips.

Losing access to
the most cutting-edge chips

has slowed down the progress

of many of the most prominent
Chinese tech giants.

Or has it lit a fire?

In August 2023,
Huawei stunned the world

by announcing a new phone

with a seven-nanometer
Chinese-made chip,

more advanced than anything
anyone thought

China could make so quickly.

It was a real morale boost
for the Chinese tech sector.

(Gao speaking Mandarin)

(translated):
China is trying to be held back,

but we will innovate ourselves
out of the problem.

KUO:
The rise
of Chinese tech giants

has changed the world.

China's model of innovation
created world-leading companies.

While many insist
that China did not come

by these gains honestly,

relying on intellectual property
theft and predatory pricing,

they still did it,

and they did it with a different
ethos and manufacturing focus

that challenges expectations
of how innovation happens.

They rose in a time
of globalization,

but their very ascent
triggered a tech war.

SCANLAN:
In my personal opinion,
it slowed down the world.

Slowed down the world.

We could have been
far more advanced

in a lot of areas--
in healthcare,

education, and a lot of the
industrial applications of 5G.

Because we would've had
more engagement,

more sharing of ideas, rather
than, "Not invented here,"

"That's an Eastern thing,
we're a Western."

Unfortunate for the world.

MULVENON:
I think the preference
is to be able

to be, reduce our dependence

on the Chinese supply chain.

Hyperglobalization had
really gone too far

and had not taken sufficiently
into account geopolitics.

GALLAGHER:
Trying to hamstring
China's ability

to innovate is really the wrong
answer to the question.

And if the question is
how can the U.S.

become more competitive,

it needs to get its own
house in order and compete.

♪ ♪

Mom, it's not working!

TRIOLO:
The reason you can have
that iPhone

with so much capability
in your hand

is the result of globalization.

So, that iPhone represents parts
coming from all over the world.

So, what we've seen
over the last two years

is essentially
a reversal of that process.

PODCAST ANNOUNCER:
Produced in partnership
with the China Project.

KUO:
What comes next? I don't know.

But I believe
that Chinese technology

will continue
to change the world,

for better or worse.

♪ ♪

♪ ♪

♪ ♪

♪ ♪

♪ ♪