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Mike Moschos's avatar

Well written and interesting! I always like to point out that these features of China’s tech-industrial ecosystems are remarkably similar to the decentralized yet deeply interconnected economic-scientific structure of the USA during the Old Republic. Before the rise of centralized financial, industrial, and scientific control in the latter 20th century, the USA's economic and scientific ecosystem was built around diffusion, heterogeneity, and decentralized redundancy where industries coevolved within states and local economies but were all deeply linked and overlapped within a national whole. Manufacturing, science, engineering, industries of all sorts, and finance developed in tandem, reinforcing one another much like China’s interlocking industries. Just as China’s EV industry benefits from its strengths in batteries, electronics, and industrial automation, early American industrialization saw railroads, steel, and machinery industries grow together, each supporting and accelerating the development of the others. This mutual reinforcement allowed for widespread innovation and competition, rather than the stagnation that often comes with monopolistic centralization. And the Old Republic’s economic model was characterized by distributed financial and policy mechanisms that enabled local industries to flourish, mirroring China’s strategic use of industrial policy to nurture overlapping sectors. Although Xi and the powerful special interest groups around him in the national center have been working overtime to politically and economically centralize China so this may be at risk of degrading...

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Save Democracy in America's avatar

Wow, this article is a revelation. I’m not qualified to judge its validity, but the argument makes sense and I learned a lot. Well done!

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Kyle Chan's avatar

Thanks!

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Michael Magoon's avatar

Very interesting article. The Chinese have done a great job at leveraging the technology, skills, organizations, and capital from one industry to move into another closely related industry. Other nations have done the same, but none have done so for so many different industries in such a short period of time.

Recently, I wrote an article going into more detail on how the Chinese have done this:

https://frompovertytoprogress.substack.com/p/understanding-the-chinese-economic

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China eVTOL News's avatar

Great read! May I recommend adding information on China’s eVTOL aircraft and flying car development? There is significant overlap, with major auto companies entering the low-altitude economy arena. There is also a lot of tie-up with battery, lidar, and other related industries.

https://chinaevtol.substack.com

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Kyle Chan's avatar

Yes definitely a perfect example

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Sandeep Kulkarni's avatar

Great Article. The CoEvolution idea is brilliant. You should write a book on this topic with that name

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Salvador Lorca 📚 ⭕️'s avatar

Good insight 😌 Can i translate part of this article into Spanish with links to you and a description of your newsletter?

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Kyle Chan's avatar

Yes feel free!

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Kyle Chan's avatar

Looks great!

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Salvador Lorca 📚 ⭕️'s avatar

Thanks, Kyle.

Maybe you want to restack it with something like this:

"My article has also been selected and translated into Spanish to reach new audiences."

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Kyle Chan's avatar

Just did!

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Salvador Lorca 📚 ⭕️'s avatar

Many thanks, Kyle !!!

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Prakash's avatar

Fantastic read!

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Kyle Chan's avatar

Thanks!

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Michael Wu's avatar

The co-evolution part reminds me of an idea presented in the book "Making Sense of Chaos':

"An industry with a deep supply chain profits when any company in that chain improves. McNerney has found that, for the typical industry, about two-thirds of technological improvements come from suppliers and only one-third are made internally."

https://www.ft.com/content/e355a827-61b0-4399-a612-61f1ead88dde

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Patricia Chang's avatar

My question is how much of this ecosystem evolved organically and how much of it was strategically driven by state policies. In other words who was the architect and why doesn’t the US have a similar long term industrial strategic policy?

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HBI's avatar

I had the exact same thought - how much policy, how much opportunity?

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Robot Bender's avatar

Given their government, I'd say mostly industrial policy.

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Frank D's avatar

Just missing the genAI video and image makers.... kling, hailou, minimax

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Md Nadim Ahmed's avatar

They say, "software is eating the world". In reality it's electronics that's eating the world. Software is just increasing the use cases for electronics.

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Leon Gerard Vandenberg's avatar

Brilliant Take and this is an industry keiretsu strategy ... is it Not?

Missing Solar PV industry ... overlapping their Electrification of Everything playbook ...

CHINT Group makes smart cities and Astronergy.com build their PV

Sunified.com understands this very well 😊

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Gary Mersham's avatar

A clear set of insights into the interplay of the Chinese digital and tech-industrial ecosystems. Your graphic illustration (you call your sketch) is visually instructive. Thank you.

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amphilomath's avatar

On this note, talent is an important aspect. Where do the likes of DJI recruit their key technical people? What is the equivalent of Berkeley?

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Robot Bender's avatar

This is what an industrial policy looks like in action. Meanwhile, in the US

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QueueT's avatar

Gr8 info. Thank you

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