In Breakneck: China’s Quest to Engineer the Future, Dan Wang offers readers a paradigm through which to understand China and the United States: China is an engineering state; America is a lawyerly state. The Chinese Government and the Chinese Communist Party (CCP) are staffed by engineers; the American Government is run by lawyers. China builds; America litigates.
The paradigm undergirds Wang’s central argument: There are advantages and disadvantages to both. The ideal would be that China adopts some of the American legal culture in order to mitigate the authoritarian tendencies of the CCP, and that the United States learns from China and rediscovers its heritage as an engineering state. This will lead to a system convergence, which will improve both countries and reduce tensions between them.
While many of Wang’s observations ring true for both countries, and there are many informative descriptions and insightful ideas, the paradigm misidentifies the real causes of China’s rapid industrialization, and of America’s seeming inability to renew its industrial prowess, and so undermines the argument for mutual learning and system convergence.
China, the Engineering State
There are several aspects in which this book is excellent and well worth reading. One among them is Wang’s description of China’s “breakneck”—aptly named—construction program. In spite of his admiration for the Chinese engineering state, however, Wang remains clear-eyed about both its extraordinary productive power and its failures.
In terms of productive power, Wang highlights the Fourteenth Five Year Plan, which is stunning in the ambitions it sets forth for the Chinese state—interstellar exploration, a Mars orbiter, X-ray free-electron lasers, cosmic ray observation stations, heavy ice breakers for polar exploration, 3,000 km of urban rail transit, hydropower facilities with ultra-high voltage transmission lines, water diversion projects, water reservoirs and flood control projects, and the expansion of e-commerce to rural areas, just to name a few.
The results have been spectacular and troubling. Wang uses the province of Guizhou as emblematic of the nation as a whole. In Guizhou, we are told, the engineering state has pushed one hundred years of American development into just twenty years, with the construction of forty-five of the world’s one hundred tallest bridges, eleven airports, five thousand miles of expressways, a thousand miles of high-speed train track, and data centers that support the development of artificial intelligence.
However, underneath all this modern, high-tech glitter, Guizhou is “mired in poverty,” with a per capita income below that of Botswana, and 40 percent below the Chinese national average. Guizhou’s showcase infrastructure has done little to improve the livelihood of its people. According to Wang, revenue from the bridges is insufficient to pay for the high price of their construction, and, although the eleven airports are underused, there are yet three more under construction. The result is that Guizhou is “one of China’s most indebted provinces.”
Wang’s warning is this: if America does not recover its heritage as an engineering state, more like China, China will win the competition to shape the future.
Much worse, and darker, is Wang’s description of another initiative of the Chinese engineering state—the one-child policy. His chapter on this policy reads like a parable of the engineering state and its penchant for massive misallocation of resources, motivated by a plan drawn up by engineers (in the broad sense to include economic and social planners), with only a tenuous and gauzy grasp of the myriad details of social and economic reality. The predictions confidently made by the planners in the 1960s, and policies based on them implemented in the 1980s, turned out later to be complete “bunk,” leading, at great human cost, well and poignantly described in the book, to the serious consequences China now faces: a dearth of population and an aging society that could make Japan’s present condition as a nation of retirement homes look puny by comparison.
Another case Wang highlights is the PRC’s Covid policy. China’s severely draconian response to the pandemic, which appears to have been caused by bioengineers in the first place, featured mass testing and strict isolation, neighborhood lockdowns, centralized quarantine facilities, and severe restrictions even down to the level of the individual family apartment. Wang chronicles the implementation of these measures, their breakdown, and ultimate failure in his excellent discussion of the 2022 Shanghai lockdown.
His critique of these policies is trenchant:
The one-child policy is one of the searing indictments of the engineering state. It represents what can go wrong when a country views members of its population as aggregates that can be manipulated rather than individuals who have desires, goals or rights. … The one-child policy brought the Communist Party to reach deep into women’s bodies; the digital surveillance developed as part of zero-Covid has allowed it to control even a person’s daily access to her shower, … engineers will simply follow the science until it leads to social immiseration.
Given all these serious problems, a question comes to mind: Are the virtues of the engineering state the real cause of China’s breakneck industrialization, or is it a matter of political economy?
One of the key features of the engineering state, as Wang defines it, is what he calls communities of engineering practice, the prime example of which is the city of Shenzhen. “The magic of Shenzhen is the combination of the world’s most creative hardware engineers sitting in a sea of components that improve every year amid a labor force of millions who know how to put together electronics.” This labor force was created when “Chinese companies leveraged the Chinese workforce into the production of high-tech engineering practice.”
But this is only part of the story. The engineering state paradigm misses China’s emulation of Japan’s export model; the indulgence offered by the United States in the form of Most Favored Nation trade benefits and support for China’s application to the World Trade Organization before it achieved the required market economy status; massive technology transfer from Japan and the West; and the stimulative jolt given to the economy by access to world trade and financial markets under the CCP’s post-Mao economic policy of reform and opening (改革开放), which introduced markets into China’s Socialist economy, and opened the country to foreign trade and investment—“Socialism with Chinese characteristics.”
One of the most important measures of reform and opening was the creation in 1980 of four Special Economic Zones, designed to be Capitalist enclaves in a socialist system that would attract foreign money, technology, and management expertise. Shenzhen was one of them. It was a cooperative venture between the Chinese regime and American, Taiwanese, Japanese, and Hong Kong companies that produced the transformation of Shenzhen from a sleepy village into a high-tech enclave with global importance.
Shenzhen’s success was due to these major changes in China’s macro political economy, not the preponderance of engineers over lawyers. The architects of the reform and opening program were not the main engineers. Deng Xiaoping, Hu Yaobang, Zhao Ziyang, and Chen Yun were not engineers. Granted, Jiang Zemin and Zhu Rongji did have engineering degrees. But they were in power essentially as the second generation of reformers who extended and deepened the original program, not designed by engineers.
Engineers are created when the market demands them and organizes them. That is what happened in Shenzhen. Consider the contrast between Stalin and Deng. Stalin ruled a government dominated by engineers, but he did not reform the Soviet system with market incentives, as Deng did. One led to Brezhnev and a dead end; the other led to the manufacturing powerhouse we have in China today.
America, the Lawyerly State
So, what do we make of Wang’s dual prescription for American industrial renewal? First, that we learn from China’s engineering state; and second, that we reduce the number of lawyers in government in favor of engineers.
Wang asks, “How can the United States do better?” His answer: learn from China. Wang suggests that Chinese EV battery companies should be allowed to open factories in America so they can teach Americans how to revive manufacturing. Wang claims that China’s global dominance in the EV battery market is due to the accumulation of deep engineering process knowledge in communities of engineering, like that which he claims made Shenzhen so successful. As we have seen, though, Shenzhen was a creature of political economy. Such is also the case with China’s EV battery industry. It is the result of mercantilist government policy, which included very substantial subsidies, tax breaks, and research and development and infrastructure investment, along with a requirement that foreign companies transfer technology to Chinese partners in any joint ventures. These policies gave substantial advantages to Chinese firms in both domestic and international markets. This is not something Americans should learn from China. It is something American policy should force China to abandon, not a model, but what should be a Section 301 case.
The problem isn’t the dearth of engineers in government. The engineers are right where they belong, in private companies like SpaceX and Nvidia.
Nonetheless, many of Wang’s observations about the deindustrialization of America are accurate: large construction projects, like the California light rail project, are almost impossible to undertake successfully. Once-dominant companies such as US Steel and General Motors have declined to the point where they have survived only due to bailouts and protection. And the crumbling infrastructure of major American industrial cities is obvious, not to mention the hollowed-out towns that make up the rust belt. Wang argues that the problem is over-regulation and litigation due to an over-abundance of lawyers in American government. Is this true?
Once again, as in the Chinese case, Wang underappreciates the significance of political-economic ideas and their implementation in actual policy. It’s not just about the presence of lawyers. Wang himself acknowledges this when he says the barriers to renewal are not uniform across all regions of the US: Texas, Arizona, and the southern states have “built new skylines and masses of new homes … but in the largest cities in the Northeast and California, the default is toward rigidity.”
Here, Wang perhaps inadvertently acknowledges that the lack of infrastructure construction in America is a problem of the left. In one example, Wang describes how the environmental movement frustrates its own efforts with regulatory contradictions. Clean energy projects face crippling delays due to permitting laws that require exhaustive environmental analysis. He also decries policies in New York and San Francisco that block the construction of new housing.
Wang asserts that the problem with the American right “is that they diagnose the causes of inefficiency as a lazy work force rather than the mountains of procedure that civil servants labor under.” But he gets the right wrong. The right’s main criticism is not with lazy workers, but with over-regulation and the government bloating that goes with it. The solution of the right involves deregulation and supply-side tax policy, both designed to give markets maximum freedom to innovate and create. The problem isn’t the dearth of engineers in government. The engineers are right where they belong, in private companies like SpaceX and Nvidia. What they need is a government that remembers the limits placed upon it by the founding generation.
Wang dismisses the right with a caricature rather than an argument and proceeds to propose industrial policy led by engineers rather than lawyers as his answer to American industrial decline. Wang praises the Biden Administration for attempting a form of industrial policy, one key provision of which was the construction of “electric vehicle charging stations across the United States.” Of these, Wang says, only seven have become operational. He faults the Democrats for this. But the real fault is with the policy itself. Just like the EV mandates, also passed during the Biden years, it completely ignored real market conditions, which did not warrant such heavy investment in EVs and EV infrastructure. The logic of the policy had no relationship to reality.
In the end, Wang’s warning is this: if America does not recover its heritage as an engineering state, more like China, China will win the competition to shape the future. With this, my feeling of deja vu all over again is complete. In 1979, Ezra Vogel published a book called Japan As Number One, which argued that the Japanese economy, guided by industrial policy, formed and implemented by the Ministry of International Trade and Industry (MITI), would surpass the American economy and lead the world into the future. In MITI and the Japanese Miracle (1982), an exhaustive study of Japanese industrial policy from 1925 to 1975, Chalmers Johnson, in response to widespread calls for an American MITI, concluded “the United States might be better advised to build on its own strengths and to unleash the private, competitive impulses of its citizens rather than add still another layer to its already burdensome regulatory bureaucracy.”
In 1990, the bubble burst and Japan slid into 30 years of stagnation. America, having rejected industrial policy in favor of growth-oriented tax policies and deregulation, led the world over the same period in economic growth and technological development.
Johnson was right in 1982. The same conclusion is unavoidable now. The path to a revival of American industry is through the American tradition of limited government, pro-growth policies, and free markets, not emulation of China’s engineering state.