What Huawei Reveals About Vertical Integration

My guest today is Dan Wang. Dan is a technology analyst and author who spent six years living in China studying its manufacturing ecosystem and tech development, best known for his new book Breakneck. Dan offers the most nuanced framework I've encountered for understanding US-China competition.  We explore a critical asymmetry: it's far harder for the US to rebuild manufacturing capacity than for China to improve scientific research, with profound implications for AI, national security, and investment returns. For investors, Dan explains the "ByteDance problem"—why exceptional Chinese companies trade at massive discounts due to Communist Party unpredictability and geopolitical risks. He argues China is a "high agency" society that executes relentlessly while America deliberates endlessly, yet also reveals the societal cost. We discuss innovation, state capacity, and investing across both superpowers. Please enjoy my conversation with Dan Wang.

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Show Notes:

(00:00:00) Welcome to Invest Like the Best

(00:05:55) China's Engineering State and Social Engineering

(00:12:15) US-China Competition: Innovation and Manufacturing

(00:19:41) The Future of US and China: Technological and Economic Perspectives

(00:25:22) Cultural and Work Ethic Comparisons

(00:39:09) Investing in China: Opportunities and Risks

(00:44:43) Future Equilibrium States Between US and China

(00:48:32) China's High Agency and Infrastructure

(00:49:58) Lawyerly Tendencies in US Society

(00:53:41) Comparing US and Chinese Societal Structures

(00:57:59) China's Historical Lessons and Future Prospects

(01:10:39) AI and Technological Competition

(01:15:30) Vertical Integration in Chinese Companies

(01:26:39) The Kindest Thing