Transcript | Kyle Chan on the Great Reversal in Global Technology Flows
Transcript (courtesy of the fantastic CadreScripts) further down the page. Image by Keya Zhou. Listen in the embedded player above!
This week on Sinica, I speak with Kyle Chan, a fellow at the John L. Thornton China Center at Brookings, previously a postdoc at Princeton, and author of the outstanding High-Capacity Newsletter on Substack. Kyle has emerged as one of the sharpest and most empirically grounded voices on U.S.-China technology relations, and he holds the all-time record for the most namechecks on Sinica’s “Paying it forward” segment. We use his recent Financial Times op-ed on “The Great Reversal” in global technology flows and his longer High-Capacity essay on re-coupling as jumping-off points for a wide-ranging conversation about where China now sits at the global technological frontier, why the dominant decoupling narrative misses powerful structural forces pulling the two economies back together, and what all of this means for innovation, choke points, and the global tech ecosystem.
4:35 – How Kyle became Kyle Chan: from Chicago School economics to development, railways, and systems thinking
12:50 – The Great Reversal: China at the technological frontier, from megawatt EV charging to LFP batteries
17:59 – The electro-industrial tech stack and China’s overlapping, mutually reinforcing tech ecosystems
22:40 – Industrial strategy and time horizons: patience, persistence, and the long arc of China’s auto industry
32:45 – Re-coupling under pressure: Waymo and Zeekr, Unitree robots, and the structural forces binding the two economies
39:22 – The gravity model: can political distance overwhelm technological mass?
46:01 – What China still wants from the U.S.: Cursor, GitHub, talent, and the AI brain drain
50:52 – Weaponized interdependence and the danger of securitizing everything
56:30 – Firm-level adaptation: HeyGen, Manus, and the playbook for de-sinification
1:01:58 – The view from the middle: Gulf states, Southeast Asia, and India as geopolitical arbitrageurs
1:09:18 – Engineering resilience: what policymakers are getting wrong about the systems they’re building
Paying it forward: Katrina Northrop; Grace Shao and her AI Proem newsletter
Recommendations:
Kyle: Wired Magazine’s Made in China newsletter (by Zeyi Yang and Louise Matsakis); The Wire China
Kaiser: The Wall Dancers: Searching for Freedom and Connection on the Chinese Internet by Yi-Ling Liu
Transcript:
Kaiser Kuo: Welcome to the Sinica Podcast, a weekly discussion of current affairs in China. In this program, we look at books, ideas, new research, intellectual currents, and cultural trends that can help us better understand what’s happening in China’s politics, foreign relations, economics, and society. Join me each week for in-depth conversations that shed more light and bring less heat to how we think and talk about China.
I’m Kaiser Kuo, coming to you this week from my home in Chapel Hill, North Carolina — last time from Chapel Hill for quite a while. I’m going to be heading off to Beijing at the end of this week.
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Over the past few years, one of the most consistently sharp and empirically grounded voices helping us to think about U.S.-China technology relations, and much more beyond that, has been Kyle Chan. He is a fellow at the John L. Thornton China Center at Brookings, was previously a postdoc at Princeton. He writes the absolutely fantastic High-Capacity Newsletter on Substack and, this is an important Sinica credential, is the record holder all time for the most namechecks on this show since paying it forward became a thing a couple of years ago. In fact, I had to stop his colleague Ryan from giving him yet another paying-it-forward shout-out. He is no longer eligible. It’s like you win Guitarist of the Year for Guitar Player three times and you’re no longer eligible.
He’s been “paid forward” and then some. Kyle recently published a Financial Times op ed, I think it was his first in Financial Times, arguing that we were witnessing a great reversal in global technology flows that after decades of Western firms transferring knowhow into China, we are now actually seeing a growing number of cases where Chinese firms sit at or near the global frontier and Western companies are the ones doing the learning. This is no casual claim lightly tossed off, as we shall see, and he’s really dug into this, and we will in turn dig into his idea.
Kyle has also written a longer piece in his High-Capacity Newsletter, pushing back against the dominant decoupling narrative, suggesting that even as politics tries to pull the U.S. and China apart, there are powerful structural forces — scale, market incentives, technological complementarity. These things keep pulling us back together. You will find links to both of those pieces, as always, in the show notes. I will encourage you to hit pause right now and read them if you haven’t already. I’ll wait. Okay. Anyway, today, I want to use those two pieces as a jumping off point to talk about what’s actually happening beneath the rhetoric where decoupling is real, where re-coupling is quietly happening anyway, and what all this means for innovation, for choke points, for global tech ecosystems. Kyle Chan, welcome at long last to Sinica.
Kyle Chan: It’s great to finally be here.
Kaiser: Yeah. Kyle (beep) Chan. All right. So, before we dive into the substance here, I actually want to step back for a moment and talk about how you came to be doing the work that you’re doing. I mean, because there’s something a little uncanny about it. I mean, the particular mix of things you’ve made yourself expert in — industrial policy, manufacturing systems, technology diffusion, supply chains, firm behavior under geopolitical constraint, electrification.
These are things that are just absolutely crucial for us to understand the world that we live in and China’s place in it. It’s hard not to look at this and think, how did anyone have the foresight to focus on exactly this set of questions before they became so obviously central? So, I want to ask this, partly as a serious question and partly with a bit of levity, how did you become Kyle Chan? Not in the LinkedIn biography sense, but in the intellectual sense. What drew you into these topics in the first place? Were you consciously trying to understand where the global economy and the tech world were heading, or maybe did this grow more organically out of just personal interests and skills, opportunities, and only later were revealed to you to be like the master keys?
Looking back, also, are there particular habits of mind, cognitive style that you have, particular analytical tools, mentors, people in your life, or personal inclinations that you think just turned out to really matter for the kind of work that you do, especially in this world where I think understanding technology increasingly means understanding systems? That’s not a simple thing. Incentives, unintended consequences are all these second and third order effects, rather than just breakthroughs in this or that. Right? So, how did you become Kyle Chan?
Kyle: Well, so a lot of these topics, they turn out to be deeply, deeply interrelated. When we talk about technology, when we talk about industrial policy, when we talk about geopolitics, markets, economics, firm behavior, the role of the state in all this, they are very, very much interrelated. And so, my interest in all this actually comes from a different place originally. And that is an interest in development. So, there’s this idea, which seems almost antiquated now, this idea that countries want to get richer, they want to become more educated. There are certain sorts of public goods that they would like to have along the way. And how to obtain these is, I think, one of the most fascinating questions and one of the most important questions one could ask.
And for me, China, in addition to the fact that my family comes from Hong Kong, so I have some language and some background there, but China is like one of the most fascinating case studies in the story of development more broadly. So, if you want to understand development, you have to understand China and vice versa.
Kaiser: No doubt. No doubt. Yeah.
Kyle: Yeah. And I actually began, going way back, as an undergraduate at the University of Chicago, which is famous for their Chicago School of economics.
Kaiser: Milton Friedman. Yeah.
Kyle: Oh, yeah. Oh, yeah. All the greats. Right? Who emphasize the role of market forces, letting the state step back and unleashing sort of private entrepreneurship, the power of individuals to reshape the world. And the funny thing is I learned a lot, it was very intellectually rigorous, but I was deeply unsatisfied with this view of how the world actually is unfolding. And this really sort of came home when I spent time in China and also in India, when I could see things that economists kind of dismiss as secondary. Right? Externalities, coordination problems, market failures. You know, they’re looking for areas where their theory might have a few holes and maybe they got to plug those holes. To me, I saw that as the story itself.
These coordination problems are everywhere — in China, in India, here in the United States as well. And so, the question became to me – is there a way to solve them? What is the best mechanism? Is there a role for the state to play in all this? And that’s where I started to dig further into this process. And when I was doing my PhD work, I decided a really interesting sort of way to enter this research problem was to study railway development. So, your listeners might be aware that China has now built the world’s largest high speed rail system, going from 0 to…
Kaiser: 47,000km.
Kyle: That’s right. More than the rest of the world combined. And you’ll hear that phrase a lot, I think, when it comes to a lot of things that China makes and produces. And actually, I did a comparative study looking at sort of China’s railway development
