China Bet $300B on EVs and Failed – Until Tesla Arrived | Arthur Kroeber

Arthur Kroeber is a leading researcher on Chinese tech and macro, a founding partner at Gavekal Dragonomics, and author of "China's Economy: What Everyone Needs to Know". It's the most useful, detailed resource I've found of how China actually works. On this episode, we discuss how China achieved high-tech manufacturing dominance, and where they'll go from here. By Arthur’s account, the Chinese government is like a giant VC fund: they decide on key priorities and then spend hundreds of billions of dollars subsidizing ruthless competition at the local level. They are willing to lose huge amounts of money for a few of their bets to pay off: at China’s scale, effectiveness matters more than efficiency. There's also a growing bipartisan consensus that we need to combat China's rise. This doesn’t make much sense to me. China is a big, powerful country at the frontier in many fields, and its economy is intricately tied in with our own. Being instinctively adversarial is both unsustainable and risky. Arthur and I discuss how we can create a productive, mutually beneficial version of this relationship. Read the transcript: https://www.dwarkesh.com/p/arthur-kroeber Apple Podcasts: https://podcasts.apple.com/us/podcast/dwarkesh-podcast/id1516093381?i=1000713627073 Spotify: https://open.spotify.com/episode/2EXad7ZEt0oXezigqd7WLe?si=45d9402e6fce4095 Get Arthur's book: https://www.amazon.com/Chinas-Economy-Everyone-Needs-Know%C2%AE/dp/0190239034 ---------------------------------------- SPONSORS * Scale is building the infrastructure for smarter, safer AI. In addition to their Data Foundry, they just released Scale Evaluation, a tool that diagnoses model limitations. Learn how Scale can help you push the frontier at https://scale.com/dwarkesh * WorkOS Radar ensures your product’s free trials go to actual users. Radar uses 80+ signals to distinguish malicious bots from real people, eliminating costly free-tier abuse. See why companies like Cursor, Perplexity, and OpenAI use Radar by visiting https://workos.com/radar * Lighthouse is THE fastest immigration solution for the technology industry. They help you understand your options and navigate applications for expert visas like the O-1A and EB-1A. Explore which visa is right for you at https://www.lighthousehq.com/ref/Dwarkesh. To sponsor a future episode, visit https://dwarkesh.com/advertise ---------------------------------------- TIMESTAMPS 00:00:00 – We should reconcile with China 00:22:07 – BYD, Tesla, & Chinese EV industry 00:38:08 – Will China have a Japan-style financial crisis? 00:45:26 – Local debt situation is manageable 00:58:23 – If CCP is so competent, why isn’t China richer? 01:05:53 – How China keeps tech under control 01:34:32 – Does China win AI? 01:44:21 – Communication with China key for AI safety 02:10:55 – What foreigners get wrong about China 02:18:19 – China-US relationship future