Urban design, ‘cultural stunting,’ and tech regulation in China, explained by Dan Wang

Society & Culture

Dan Wang, a technology analyst at Gavekal Dragonomics, appeared on the Sinica Podcast to discuss his latest annual letter commenting on a wide range of developments in contemporary China.

dan wang
Illustration for SupChina by Derek Zheng

Below is a complete transcript of the Sinica Podcast with Dan Wang.

Kaiser Kuo: Welcome to the Sinica Podcast, a weekly discussion of current affairs in China, produced in partnership with SupChina. Subscribe to SupChina’s daily ACCESS Newsletter to keep on top of all the latest news from China from hundreds of different news sources, or check out all the original writing on our site at supchina.com. We’ve got reported stories, editorials, and regular columns as well, of course, as a growing library of podcasts. We cover everything from China’s fraught foreign relations to its ingenious entrepreneurs, from the ongoing repression of Uyghurs and other Muslim people in China’s Xinjiang region to the tectonic shifts underway as China rolls out what we’ve been calling the Red New Deal. It’s a feast of business, political, and cultural news about a nation that is reshaping the world. We cover China with neither fear nor favor.

I’m Kaiser Kuo, coming to you from Chapel Hill, North Carolina. This week, I am continuing with this informal series of podcasts themed around “thinking about thinking about China.” When I first introduced today’s guest last year, around this same time, I noted that he was someone whose approach to thinking about China was one that I very much admired, and that he checked all the boxes in my mental checklist for China analysts. Naturally, as I thought about people to invite to speak on this series, his name came up immediately.

Dan Wang is a technology analyst with Gavekal Dragonomics, and many of you will remember him from his turn on Sinica in early 2021, when he talked about his annual letter, something of a tradition now for the last several years. Well, Dan has recently published his 2021 letter, and it does not disappoint. It’s chock-full of insights and observations, which are, in their own right, very much worth turning over in your head, but just as interesting to me is Dan’s ability to take in the bigger picture, to offer a multi-lens view that’s sensitive both to Chinese and to Western perspectives, to recognize and really to deliberately set aside the sorts of biases that are all too often present in outside analysis of China, and to make candid, dispassionate comparisons.

After all, China and the United States are confronting, broadly speaking, many of the same problems, but are taking radically different approaches to them, and the perspective offered by Dan is invaluable for those who want an unsentimental comparative look at how they are responding to the pandemic itself, to the vulnerabilities that it has exposed in both systems to income and wealth inequality to the more deeply rooted pathologies of their respective political economies.

“We need a better understanding of this country,” writes Dan of China. “Too many commentators have been interested in the story of China’s collapse. When the collapse doesn’t come, they lose interest and move on. It’s a more important and more subtle skill to figure out how this country can succeed, because that is the exercise the Chinese leadership is engaged in.”

Dan joins us from Shanghai, but we will be roaming all over China in this discussion. Dan Wang, I am so delighted to have you back on and so eager to get into this conversation. Welcome back to Sinica, man.

Dan Wang: Thank you, Kaiser. What a pleasure it is to be back on the show.

Kaiser: Yeah, fantastic. You’ve had an interesting year. First of all, listeners, I think you will all get a lot more out of this conversation if you just hit pause. Take 20 minutes, first, and go and read Dan’s 2021 letter. Do that right now, if you can. If you are in a hurry to get back, you can skip the long section on opera, not that it’s not interesting, but maybe we won’t be talking about it so much on this episode.

Hey, welcome back, listeners. That was good, wasn’t it? Okay, Dan, so I’m sure I speak for many of the listeners who aren’t currently in China, when I say that it’s been really frustrating to see so much happening in China, changes of such obvious historical importance, not just at the level of policy and regulation, but also changes in the national mood, in the zeitgeist, and just not being there on the ground. I mean, I lived there for 20 years, and not being there has been pretty painful. We may talk to people in China quite regularly, practically every day, as I do, but it’s still not the same at all as living there and being immersed in it. Thanks for taking the time to help fill us in.

Let me start where you do, really, with your thoughts on China’s major conurbations, all of which you’re now familiar with, to some extent, having lived in three of the mega regions. I think anyone who has lived in China and spent time in all those regions — the North, Beijing and Tianjin and environs, in the Yangtze Delta cities, and especially Shanghai, of course, and in the Pearl River Delta — will recognize, I think, the truth in your observations about them.

I’ve often observed, actually, that the caricatures and the stereotypes that people have of them in other parts of China, and even outside of China, are actually embraced by those being caricatured or stereotyped. Beijingers are lazy, garrulous, obsessed with politics and power. They know that. They’re okay with it. Shanghainese are fastidious and detail-oriented, but they’re also philistines and their kind of petit bourgeois. The Cantonese are really gritty and hardworking and unpretentious, and they’ll eat anything, but hey, they’re good with that, too. Where, if anywhere, would you say that your observations, Dan, depart from the prevailing stereotypes?

Dan: Right. Well, first of all, I should say that Chinese stereotypes are kind of my favorite thing. They are, as you say, exactly that. Beijingers just really like to talk, and they’re fantastic at talking. They’re just absolutely superb at telling these wonderful stories about everything that they see, everything that they observe. I think the trope of the Beijing taxi driver telling someone everything they need to know about China, well, there is at least a bit of a grain of truth in there.

You’re right. To me, Beijing does stand for this more intellectual, more garrulous aspect of thinking about China that is a little bit more focused on the bureaucratic aspect of power. Shanghaiers are, I think, a little bit more in between. They’re much more commercial. They are much more international. I feel that the majority of expats are in Shanghai, not elsewhere, because it is just a superb place to live.

Kaiser: Oh, yeah.

Dan: Then, Shenzhen is really the apotheosis of just the pure, money-making spirit. I should also say that I’ve lived in three regions of China. These are the three most economically developed regions of China, but they’re not every region of China.

Kaiser: Right.

Dan: There are plausibly something like 15-20 more mega regions that I did not spend substantial time in, and I can’t really speak about. You asked how I depart from the stereotypes. What I wonder, I think — still right now, my home region of Shanghai, the stereotype of Shanghai is that it is very much commercial, very much internationally looking, looking towards the sea, and I think it is also still the place where it was the founding of the Chinese Communist Party about exactly 100 years ago. It was the main site of the Gang of Four during the Cultural Revolution, and it was, two general secretaries ago, during the time of Jiang Zemin, that was a lot of development then, and there is still a lot of Shanghainese currently within the Politburo.

Kaiser: Sure.

Dan: What I have to grapple with is Shanghai is indeed very commercial, but it is also very political, and I wonder how to reconcile these two. Kaiser, I wonder, out of the three areas that I identify, I think I’m clearly very sympathetic towards Shanghai, but I’m also still… I think I consider myself a northerner at heart. I wonder how you consider these three regions in your own thinking.

Kaiser: Oh, yeah. I mean, I’m a Beijing partisan. Obviously, 20 years of my life there, I’d only spent about six months living intermittently in Shanghai. There’s nowhere else in China that I’ve lived for a prolonged stretch. My wife’s a Beijinger. All of my good friends, my bandmates, they were all Beijingers, born and bred.

Also, it fits my personality. I’m like that. I’m kind of zhishuang and a very… Well, I’m fascinated by politics, by power. Yeah, by the exercise of authority. I host a goddamn podcast. I mean, I do like to talk, and I love to listen to people tell stories. Yeah, Beijing’s it for me. I certainly agree with your characterization of Shanghai, I mean, that there is an awful lot of power that grows out of its economic vitality, and so, yeah, of course, Shanghai’s really important. Yeah, we’ve seen major factions arise out of Shanghai and really dominate the political landscape for much of the reform and opening period, so yeah.

I was wondering. I was chatting with, I don’t know if you know him, but Don Clarke, who is a China-focused legal scholar. We were exchanging some of the wit and wisdom in this great series of books that I started reading when I was a kid, Will Durant, and later Will and Ariel Durant, The Story of Civilization. He has this book — the first in the series — called Our Oriental Heritage. In it, he wrote something that Don… We were exchanging on Twitter some of the great things that Durant had said, and he wrote this. He said, “China, like India, is to be compared with Europe as a whole, rather than with any one nation of Europe. It is not the united home of one people, but a medley of human varieties, different in origin, distinct in language, diverse in character and art, and often hostile to one another in customs, morals, and government.”

Now it happens that I was reading your letter, or re-reading your letter, actually, just at that very time. Now that was published back in 1935, but it occurred to me that in the 90 — what, 90 years? since almost, since 19… and especially, really, since 1949, one of the great projects of the central government has just been one of homogenization. When you look at these mega regions in which you’ve lived in, it’s clear that what Durant wrote is, to an extent, less true, due to these efforts at homogenization, than it was, but still kind of true, right? I mean, despite these efforts, so I would say that diversity, though, has been a great source of strength culturally, economically, intellectually for sure, but that too much regional diversity presents some real governing challenges. Has homogenization, in your mind, gone too far, not far enough, just about right? Where are you on this?

Dan: Well, I think you are absolutely right, first of all, Kaiser, that this has reduced, that this homogenization is much, much more present in China. I see this in, I think, in many different ways. I mean, first of all, standard Mandarin is now common in most places, certainly among the elderly. In many different regions, they’re still not quite speaking a perfect standard Mandarin, but that is much more present.

I find that I think this regional identity is not so important anymore, at least in, let’s say, Beijing and Shanghai, where there is just considerably more wealth around the country, such that it shouldn’t be surprising that there are rich people in relatively poor provinces, and they’re agglomerating in a city like Shanghai or Beijing. I think it has become much less important where you are from, so long as you are doing something good and excellent.

I think the other sort of surprising thing to me is… I think one of the points I mentioned in my piece this year is that one of the things that China has figured out is the homogenization of these slow casual chain restaurants, the likes of Din Tai Fung, the likes of Tai Er in terms of sauerkraut fish, the likes of Xibei in terms of the northwestern meats and breads. That’s not something that China, I think, has really figured out in the past, just these broader supply chain food consistency issues. That’s something that it has figured out more recently. You see, basically, a little bit more of the homogenization of the malls and everything else, as well.

Now, where do I stand on this trend? I think I’m broadly in favor. I have always been a quite strong partisan for standard Mandarin. I’m not sure if you know this about my family, Kaiser, but my mom was a radio news anchor, and she was also a television news anchor, and that she forbade us to speak our local dialect. We could only speak CCTV Mandarin to her, and that is how I’ve been raised, and that is actually quite something I enjoy, that standard Mandarin is very much everywhere in this country. I don’t think that this, too much homogenization is too much of a bad thing, so long as you don’t lose many of the local customs, but I think it is very, very good that there is a common language between the different regions, and I mean common language in many different facets, so that people are able to speak with each other, interact with each other, do business with each other, without having too many of these local prejudices against each other for when they get into business.

Kaiser: That’s what I like about you, Dan, is that I always expect to be surprised, and yet I’m always surprised. Your section about the three main mega regions also includes some discussion of Hong Kong and its fate. You weren’t living there during the demonstrations over the extradition bill or for the protracted and agonizing protests or for the imposition of the national security law, but you say that you were already aware that Hong Kong was a city in structural decline. What were the signs of decline and what was the underlying pathology of Hong Kong, in your estimation?

Dan: Well, first, I should acknowledge that a lot of people went after me on Twitter, as well as by email, saying that my section on Hong Kong was too mean. This, I concede. I think I was quite mean against Hong Kong, but there was also a lot of criticism that my claims about Hong Kong were too mainland-centric, which, in my view, does not constitute a substantive pushback against any of my claims. I don’t think that any of my claims actually substantially overshot in terms of how they described Hong Kong.

The first thing I should acknowledge about Hong Kong is that it is a tropical paradise, you know? It is really wonderful to be living in the world’s third largest financial center and be able to access hikes, be able to access beaches, go on these pleasure ferries to just visit outlying islands. That all is very, very nice, but what I did not enjoy about Hong Kong… I was there from 2017 to 2018, over those two years, as you say, before the protests, is that it has been stagnant for many decades. I think it is very, very difficult to walk around Hong Kong and spot something that has been new since 1990.

In 1990, Hong Kong was one of the most advanced cities in the world. You have the Octopus card. You have just a lot of very good, comfortable situations that the city has designed, and I don’t think that it has advanced very substantially since that point, from payments to everything else around the soft infrastructure of the city. I think the best data point is that, unlike Singapore, Hong Kong’s business landscape really has been stagnant for the last three decades. It hasn’t created very many new companies. It is still the preserve of property developers, as well as big conglomerates, and it is almost entirely a finance and logistics driven town.

The data point that I’d like to cite is that if you want to be an artist in Hong Kong, your rent is going to be $3000 in the middle of Kowloon, which is quite far from the city center. It is just really, really difficult when you have to pay that much in rent to be quite an innovative person. Hong Kong really has been, I think, very stagnant for the last three decades, and it’s just not been an economically vibrant place, driven so much by this obsession with finance and not really allowing younger people to be very, very experimental or very, very innovative.

Kaiser: So you lay the stagnation really at the feet of this class of property developers and bankers.

Dan: That’s exactly right, and I think the person who best outlined the structural forces here is a friend of mine in Hong Kong, Simon Cartledge, who wrote one of the short books for Penguin about five years ago, and has also written more extensively about this, which is to say that it’s really about the local Hong Kong elites, which were first co-opted by the British colonial authorities to be relatively docile as the British authorities handed out land to the most docile. Then, the Chinese governing authorities, when they took over Hong Kong about 20 years ago, what they did was they took a look and asked themselves, “How does Hong Kong work? What makes it successful?” It is to empower the business elites, and so I think this… Hong Kong business elites had this benefit, first of all, from the British authorities and then, second of all, from the Chinese authorities, basically to keep their monopoly profits for as long as possible. That’s something that they’ve done very well, and that has made the city very, very stagnant indeed.

Kaiser: Yeah, yeah. You note that you still have sympathy for Beijing, that there is, as you say, “still a use for the hard men of the North,” and suggest that, in the present context, that use might be in taming the venality of the capitalists of Shanghai and Shenzhen. Should I take this to mean that you think that there is a geographic or sectional politics to this common prosperity agenda that we’ve all been talking about?

Dan: I think that what Beijing represents is really this idea of the pursuit of utopia, that Beijing is not satisfied with wealth accumulation, per se, that moneymaking cannot be the final standard of truth. Now I’m going to exaggerate the stereotypes a little bit here, but in my view, people in Shenzhen and people in Shanghai are quite a bit more concerned with money than with other issues. One of the opinions I like to cite is Chen Yun, who was one of the major figures of reform and opening, in terms of representing the conservative faction. He was from the Shanghai region, and he thought that everyone in his home region of Shanghai were simply opportunists, who would sell the social order for a dime.

The Shanghaiers and people in Shenzhen really distinguish themselves for being able to make quite a bit of money. In terms of how I think about Beijing from being this intellectual place for driving towards these bigger ideas, and that was really the core of my essay in 2020, that Beijing is obsessed with these centralized campaigns of inspiration, in which it is always trying to lift the gaze of the capitalists into pursuing some form of utopia. Utopia, as Beijing understands it, is socialist modernization by 2049, as well as the great rejuvenation of the Chinese people. I think this is, it is not merely satisfied with being rich. There must be some form of socialist modernization or rejuvenation of the people along with it. This is why I think that common prosperity is, in part, this way to tell the capitalists this is the social order that we want you to aim for, that it’s not just enough that some people are able to get rich. First, prosperity means wealth for the entire people. I think this is part of the Northern Beijing agenda, to corral people into having these political goals that they must pursue.

Kaiser: It’s interesting that you put a geographic locus on it, but I think that you could make that argument pretty well. Now let’s dig a little bit into this common prosperity agenda, what we at SupChina have dubbed the Red New Deal. To me, making useful sense of what we’re seeing today in China requires that kind of integrative mind that can see the thing from a bunch of different angles. I think you, being such a person, if you could, could you talk about how you approach this issue? I’m not asking, in other words, what you think about it, specifically, but how you think about it. How do you come at this flurry of regulatory change, all these new lifting of gaze mobilizational efforts that we’ve seen coming out of Beijing? How do you come at that? What are some of the ways you’ve thought about it?

Dan: That’s a very good question, Kaiser, and I think the challenge with something like “common prosperity” right now is that it remains a fairly vague slogan, and we don’t really know what constitutes common prosperity because, at this moment, we still don’t really have any real regulations, any real policies, attached to this big slogan. I think the way to approach this question is to approach it like any other major Chinese slogan like reform and opening. What exactly did reform and opening mean when it was first announced in, I think, something like 1979? We didn’t really know what it meant because it took about a decade for the policies really to roll out. It was signaled by Deng Xiaoping that we will cross the river by feeling the stones. Practice is the sole criterion for the determination of truth. There are some guideposts there, but right now, we don’t have a very, very good idea of what common prosperity means. I think right now my mode is still just very much a wait and see. I expect we will have somewhat greater clarity on this question right now, but it is not right now to be too excited about every part of it, because I suspect that the leadership itself still doesn’t really know what exactly will constitute what every part of common prosperity. They’re just going to put out some trial balloons and then figure out what it will mean from here.

Kaiser: Those trial balloons, though, have been launched from a lot of different launchpads, a lot of different sectors, a lot of facets to this thing already. It’s already clear that there isn’t just an economic component to it, that there is a cultural element to it, as well. There are preferences in terms of style, even, and in terms of… Yeah, I mean, I think it’s multifaceted, and that’s really what it’s getting at. You’re right. We don’t see it really clearly, but I thought that the speech that Xi gave in August, and that was finally published in Qiushi in October was… I mean, I think we can see the outlines of it, at the very least.

Dan: You’re right that the Qiushi speech published in August gives some outlines for what Xi Jinping wants in terms of common prosperity, but the issue is that it is still fairly vague thrusts towards some sort of a political ideal in terms of how to make the country quite a bit more equal, but what exactly does prosperity for the entire people constitute? What we need to know are when exactly the property tax will be rolled out much more broadly; exactly what sorts of redistribution policies this will constitute; what exactly tertiary distribution, tertiary redistribution, will mean in terms of beyond encouraging people to donate more to private charities. I think there will need to be quite a bit more real policies attached to common prosperity in order to make the country more equal. At the same time, Xi Jinping has already said that common prosperity does not constitute egalitarianism, and then also that he doesn’t want a perfect welfare state, because that would make the people lazy, so already there are some contradictions in here about what common prosperity will mean.

Kaiser: Yeah, yeah, and I think that’s to be expected. As you said, we didn’t see the clear outlines of reform and opening until… It was an iterative process. It came out a little bit at a time.

Dan: Yes, exactly.

Kaiser: I suggested in our introduction that China and the U.S. face quite a number of analogous challenges. One that I had in mind was addressing the related problems of wealth and income equality and the power of technology companies. What do you make, so far, of Xi Jinping’s efforts to tame the robber barons of China’s Gilded Age? How’s he doing on that count?

Dan: Right. Well, first of all, you referenced, one, Roosevelt’s plan of a Red New Deal. Here is my attempt to reference an earlier Roosevelt’s plan of taming China’s Gilded Age. There are a lot of people who say that China is presently in its own Gilded Age, and it has a lot of ebullience as well as a lot of hucksters. I think that part of the summer storm, part of the crackdown, over this year is to really try to rein in a lot of the excesses of its own Gilded Age. Now, the progressive era with Chinese characteristics doesn’t really look like the progressive era that the U.S. prosecuted in the 19th century.

Kaiser: No, indeed.

Dan: It is also concurrently coming down with this crackdown on not just taming robber barons, but also men who would rather prefer to look like women. I don’t believe that is something that the American government ever really tried to regulate, and so this is a very strange sort of crackdown. I quite like the term summer storm, which is something that —

Kaiser: Barry Naughton.

Dan: The economist, Barry Naughton, came up with. That’s something that I think I’ll reference as a metonymy for the entire regulatory program over our conversation. I think the summer storm really has, I think, three components. The first component is a lot of the technocratic reasons the Chinese leadership is thinking about how to govern these major technology companies that are pretty much identical to the same debates and the same issues that the U.S. and Europe are currently discussing, that there need to be better regulation of these major platforms, which should not be substantially hurting smaller firms. There need to be better data privacy. There need to be better use of data issues and better use of algorithms, as well.

Dan: Where the Chinese landed this year, I think, is not a thousand miles away from where the U.S. and Europe are discussing. Now, what is special about China is basically the speed and the ferocity that it brought to bear on these regulations. These regulations would never be passed so quickly in the U.S. or Europe.

Kaiser: Right.

Dan: I think a second component of this broad crackdown is the greater desire for political control over these major companies. I think that frankly has to be acknowledged, that the Chinese leadership has decided that these major tech companies are too large. They have too much data over different people, and they need to have some regulation as well as some political control brought to bear on them. The Chinese government is much more interested in direct political control and a sort of ideological compliance with all of these companies. I think that is fairly different from the U.S.

I think a third component here is, I think, still more broadly spiritual, civilizational yet, which is to try to turn China’s style of capitalism into more of a German direction, into less of a U.S. or U.K. direction. I think it has mostly rejected capitalism as it is practiced in something like the U.S., where the two major growth regions over the last 20 years have been Silicon Valley on the one coast, which means consumer internet, as well as Wall Street on the other coast, which broadly represents financialization. I think China is looking far more longingly at Germany, which is driven quite a bit more by manufacturing firms, by industrial firms, by firms that are not too large. I think that China is much more keen to be practicing manufacturing instead of delving still further into digital technologies as well as manufacturing, which is really the U.S. competence over the last two decades.

Kaiser: Absolutely. Going back now to what you were saying about… You were basically describing two competing narratives about the summer storms, especially as they affected the internet sector. There were some people who were arguing pretty vociferously that this isn’t ideological. This isn’t about the government trying to exert control, necessarily. It’s really that there was a lot of moral hazard in these things, that they were being really irresponsible, that they were riding roughshod over user privacy, abusing data. There was that narrative, and then the other one that said, “Nope. You look. They’re just trying to bring these guys to heel. They see them as a rival locus of power, and they’re never going to allow Jack Ma to do that.” I never accepted, wholly, either of them, and I see you don’t either, which yeah, I think I completely agree with you that it can be and, in fact, is both.

Dan: Yes. Certainly, I think, there is no contradiction between either.

Kaiser: That’s right.

Dan: I think there is both a technocratic crackdown as well as some sort of ideological crackdown as well. I don’t see why we have to embrace either one or the other. It is crackdowns on both sides. It is certainly both.

Kaiser: You talk about how China is drawn toward Germany. The other side of that, of course, is that it is repulsed by what it’s seen happening in the United States. It still looks to the U.S., China does, obviously, and sometimes it looks to the U.S. for positive examples, but increasingly, it strikes me that it’s looking to the U.S. to see what it should avoid.

What are the negative lessons that Beijing now sees as it looks across the Pacific to the U.S.? I mean, you focused on a few things. You talked about over-financialization, the East Coast, Wall Street; the West Coast, the embrace of consumer internet, the lionization of consumer internet, which was a big theme in your 2020 letter, which I thought was fantastic; but also, this German example, the fear, and this comes from the U.K. and U.S. as well, of the hollowing out of manufacturing, and the breakdown of what you call communities of engineering practice. That is one of the most attractive things, I imagine, that it still sees in Germany. Can you talk quickly about what Beijing fears and how it wants to go about limiting and preventing that kind of an outcome in China?

Dan: I think the revulsion of the U.S. system started a little bit earlier, in 2008, when-

Kaiser: Sure.

Dan: That was, I think, the high point of U.S./China cooperation when, in the last time Beijing hosted the Olympics, President George Bush came over and seemed to have quite a lot of fun. I think that really represented the high point of U.S./China cooperation. After the financial crisis of 2008, what it seems like happened is that Beijing took a look over there and said, “Well, maybe this isn’t the system that we ought to adopt wholesale.”

Over the last 13 years, the Chinese government has steadily moved away from the U.S. model. I think the summer storm of this year shows just another ratchet away from the U.S. model, in terms of rejecting consumer internet as well as financialization. Now, I should say that previously I used to work in Silicon Valley. It’s not simply consumer internet over there. There is also a lot of great work being done on software. There’s a lot of great work being done on business software, in particular, right now. I think the U.S. technology giants have a much better claim for technology innovation than the Chinese giants, in terms of Amazon having promoted basically Amazon Web Services, as well as retail productivity much more broadly throughout the economy.

What I suspect that China isn’t very enamored of is that it has realized that consumer internet is not necessarily the very peak of technological progress. In terms of having a lot of social networks, these are presenting as often speech problems as well as other types of social problems that are being very much discussed in the U.S. as well right now, and also for not doing a lot of R&D that really promote much more strategic objectives. I think when it takes a look at something like online tutoring, for example, China has realized that a lot of what the online tutoring companies are doing is monetizing the status anxieties of middle class parents such that Mrs. Zhang keeps feeling being outspent by Mrs. Li. Then, also, when it is taking a look at something like Ant Financial, well, it is very plausibly introducing some pretty novel financial risks into the system and should not be celebrated, per se, as innovation because it is also creating a lot of social problems while it is being pretty innovative.

I think that is… A lot of the agenda that Beijing has, it is to try to create an economic system where the physics PhDs are not necessarily going en masse into hedge funds as well as consumer internet.

That’s something of a trend over the last 20 years, and I think that has been a tragedy for the U.S. economy. What I think Beijing wants to do is to make sure that the physics PhDs can do some physics, and the marine biology students can do marine biology, such that it’s not just all the smart kids are just simply going on to work for consumer internet firms or on Wall Street.

Kaiser: Yeah, you put it really nicely: “Beijing’s goal is to channel entrepreneurial spirit into useful goals.” I think we have a pretty clear idea of what it believes those useful goals are. There’s also a fantastic section in your… We won’t discuss it, but I just want to make sure that people are alerted to it, when you talk about Meta and you talk about the virtual worlds. China revolves in that virtual currency, that virtual worlds. I mean, that hasn’t played out yet, but it certainly will. I think you’re absolutely right. It’s that, and again, you had a lovely turn of phrase, “Xi wants people to live in the physical world, make babies, make steel, make semiconductors.”

Now, you’ve pushed back on this idea that what we saw at the beginning with Alibaba and Didi was a tech crackdown, but it was really more of a crackdown on consumer internet companies and on financialization. I completely agree, but people continue to frame this as a kind of all-out assault on tech that is going to kill innovation and creativity among Chinese entrepreneurially minded. You saw Li Yuan’s op-ed piece in the New York Times the other day, didn’t you?

Dan: Yes.

Kaiser: Did you see that? Yeah. I mean, but let’s talk about you do raise concerns over the risk that the crackdowns, not these tech crackdowns, but the heightened regulatory demands overall, might actually dampen economic dynamism. Can you talk about that and distinguish the two?

Dan: Certainly, I think there is a risk that people are just too scared of this tech crackdown to do much more, and I should note that my friends, who work in online tutoring or who work in ride sharing, today have PTSD, because they have no idea if their next venture might just be almost outlawed by the Chinese government. They are certainly very, very nervous. I think this is almost entirely a coincidence, but the major term to come out of China this year was tang ping, to lie flat and not do any work. I suspect this had nothing to do with the Chinese regulatory campaigns, as such, but this is a bit of an issue out there, that a lot more Chinese simply want to be slackers and chill.

Kaiser: Yeah, I mean, I think that that was really a response to 996, though, and in fact, this is something that was part of the summer storm, too, is they went after 996 culture. They started to enforce more labor regulations and to outlaw contracts that demanded those sorts of outlandish hours.

Dan: That’s exactly right. I think there is certainly a risk that the summer storm has dampened entrepreneurial spirit. What we do know is that a lot of Chinese founders, the founders of Pinduoduo, the founders of ByteDance, many more of them have simply announced that they are stepping down or stepping into the background to take some sort of non-executive role. I think that has created quite a lot of fodder for people to think that this is not something that is encouraging entrepreneurial animal spirits.

I think, in general, I am more inclined to take the other side of the bet. When I talk to entrepreneurial friends of mine, they think that Jack Ma has all of these champagne problems that are just far too removed from their daily economic life. Jack Ma still remains one of the richest men in the world. He’s spending quite a lot of time playing golf, doing calligraphy, examining agricultural technologies in the Netherlands, hardly seems like a very bad life.

There are still a lot of people doing quite a lot of interesting projects in China, who would love to have the problems that Jack Ma is having. I suspect a lot of the people who were working in online tutoring or working in ride sharing, who are programmers or developers now, will at some point figure out better jobs. They’ll just have to figure them out in areas that are in favor from the Chinese government. These are things that include semiconductors.

Kaiser: Industrial robotics and semiconductors.

Dan: Industrial robotics, renewable technologies, aviation technologies.

Kaiser: That’s right.

Dan: We can go on. That will be quite a bit harder to try to find these jobs if they didn’t have the skills, but I suspect that they will be able to find pretty remunerative positions at some point.

Kaiser: And the Chinese leadership does you the favor of flagging the fengkou pretty clearly, the wind tunnels or whatever, pretty clearly. You know where the fans are going to be placed that you can set your sail to.

Dan: Sure.

Kaiser: Yeah. One observation that you made that really intrigued me was about the U.S. focus on efficiency versus the Chinese focus on resilience and how China’s approach might not look good by traditional measures that economists have used. America’s obsession with efficiency and just-in-time delivery and things like that, it actually results in fragility, while China’s approach is anti-fragile, as Nicholas Taleb might have said. “The U.S. focus on efficiency,” you write in your letter, “has revealed the brittleness of its economy, which has neither the manufacturing capability to scale up domestic production of goods, nor the logistics capacity to handle greater imports.” Can you unpack that argument a bit? Because I think it’s really compelling.

Dan: My starting point for making that argument is a lot of the economists’ claims that China does poorly in a lot of metrics that economists like. One of these is return on equity. Another are things like total factor productivity growth. In my view, the focus on these factors is that it’s often an indictment on the economic profession, in which this focus on return on equity, as you put it, just-in-time logistics, and lean manufacturing, these have really revealed how fragile the U.S. economy is during this pandemic.

Now, to be fair, I think this once in a century pandemic is not necessarily something that businesses really ought to plan for. For a lot of these once in a century events, it really ought to be the government that thinks quite a lot about these things. I think it is still an indictment on the U.S. corporate sector that they have focused to this extent on efficiency, such that they are. Note, they have been getting rid of their workers for quite a long time. They’ve been getting rid of their inventory, and I think there should be a bit of a corrective to think about how to build a little bit more resilience into supply chains.

I think the broader point I have on this is that this very deep focus on efficiency has eroded a lot of U.S. manufacturing capacity. Now the U.S. manufacturing workforce has really fallen off its peak in the 1970s, and what I should note is that U.S. manufacturing real output still today has not overcome its 2008 levels. It is still below its 2008 levels, and I think this speaks to the broad trend of de-industrialization in the U.S. It has de-industrialized. It has lost a lot of its manufacturing workers. As a consequence, it has lost a lot of the process knowledge it needs to really be an industrial economy, to really have the skills to build much of a manufacturing sector, and I think this has been very much revealed by the pandemic. Now China is less interested in perfect efficiency. It builds a lot of spare capacity into its system.

Kaiser: Redundancy, too, yeah.

Dan: That’s right, redundancy. It trains a lot of workers that are not necessarily making very efficient products. Again, you can debate whether a once in a century event really validates the Chinese system, perhaps not. Perhaps redundancy is still something that we should, in general, try to reduce, but I think there ought to be some sort of a middle ground between the U.S. hyperfocus on efficiency, as well as the Chinese focus on resilience. That should make a stronger economy.

Kaiser: You probably got in trouble again with the Hong Kong guys for saying this, but you wrote, “Figures must be reconciled with observations on the ground. During my time in Hong Kong, I found it absolutely hilarious to see annual rankings by think tanks giving the city-state the highest marks on economic freedom while its business landscape has been static for decades. I submit” — and this is really the important part — “that observers are making a mistake in the opposite direction when they use macro indicators to underrate dynamism in China.” That’s a really interesting statement. What is it that you see on the ground there in China that suggests hidden sources of dynamism?

Dan: The good and the bad thing about China, Kaiser, is that everything changes every 18 months, and so it’s all the more important that people are able to see what’s going on, on the ground here, and that is on the tragedy of the pandemic that prevents people like you from coming over here. I think, just in general, as I mentioned earlier, when you walk around Hong Kong, there isn’t too much really new over the last 30 years when it was an advanced society. By the same token, walking around China just, I think, exposes a lot of the silliness of these economic rankings that put Chinese dynamism very, very low. That total factor productivity growth, which is poorly measured anywhere in the world, is falling in China. I think these metrics should not govern our understanding of the Chinese economy.

Dan: One of the things that I mentioned earlier is that the standardization of the slow, casual chain restaurants. I think that is something that is a quite difficult problem to get right, this issue of food management. From a very micro level, that Chinese managers have been able to figure this out, I think, is a sign that Chinese have been pretty good at a lot of these quality improvements that are not necessarily captured very well by total factor productivity growth. I sit in Shanghai. A lot of the entrepreneurs that I chat to have not gotten the memo that globalization is dead, that the entire world is rejecting Chinese products, that the innovation, that the sense of innovation, really is over from the summer storm.

They’re still trying very hard to create billion dollar businesses, and just from this trend of general quality improvement within established businesses that I observe in Shanghai, as well as still quite a lot of enthusiasm by entrepreneurs that they are out there, that the world is their oyster, that they are going to conquer the world with their products. Because I observe these two things, quality improvement in established businesses as well as new innovation, I suspect that the rest of the world would be underestimating China if they’re only looking at these macro indicators.

Kaiser: I love the way that your letters every year make me think so much about China. They always, infallibly, make me think an awful lot about my own country here, the United States, as well. American China watchers, including many close to me, are often lamenting what they see as a lack of reforms in China, or progress on reforms, by which they almost always mean market liberalization or deregulation. Some of them might be surprised to read in your letter this year an indictment of America’s seeming inability to reform. You use the word reform.

We usually don’t use that when we talk about the kinds of legislative changes that are needed to get America out of gridlock or to change, get America on a new economic footing. We don’t use the word “reform.” It’s strange. I’m wondering what jarred me about reading that word in this context, but you go on to note that the way that China meets challenges, like greater labor unrest, by simply creating more jobs through SOEs in areas where that unrest is happening. Then a few paragraphs later, while musing about decoupling, you report that MNCs that you’re talking to speak quite approvingly of five-year plans and lament that the U.S. never provides that kind of predictable policy continuity. One might interpret this as a suggestion that the reforms that America really needs actually involve much greater state participation in the management of the economic activity. Would that be accurate?

Dan: Well, I’m not sure I would go quite so far, Kaiser, but first of all, I agree with your framing that maybe the U.S. needs a reform and opening of its own to be much more serious about thinking about how to make itself quite a bit more competitive. Now, I think the idea of reform that I do not observe so much in the U.S. is, first of all, I think that U.S. state capacity has not covered itself in glory over the last 20 years between the various wars in the Middle East, between as well as the financial crisis as well as the pandemic. I think the pandemic has really exposed a lot of the problems with the federal bureaucracy in DC, especially with the CDC, that I think are not doing so well.

In the face of a decline in state capacity in the U.S., what President Biden has done very well is he has created a lot of legislation to try to improve the U.S. What I observe is that a lot of these pieces of legislation, for example his big infrastructure bill as well as the proposed U.S. Innovation and Competition Act is that these pieces of legislation don’t do fundamentally quite a lot to try to fix and tune up these broken federal bureaucracies.

We have now — a lot of the science disbursement agencies, a lot of the stories out of them is that a lot of these grant administrators are much more concerned with style guides rather than with the science. The U.S. now has the most expensive regime in the world for building infrastructure. It’s the slowest as well as the most expensive. A lot of these things need to be fixed. Now, what President Biden has done is increased spending through these channels.

Kaiser: Just throwing money at it.

Dan: Throwing more money at it, which certainly helps, but what I am more interested in the U.S. is to be quite a bit more active about fixing these institutions. That is really something that I think China is still pretty good about. One of these things that I’ve been looking at in China is, for example, the system of intellectual property. This is one of the most maligned issues about China, but if you talk to basically any IP lawyer in China, they would acknowledge improvements in the system over the last few years. There is now an IP court within the Chinese supreme court system. There are IP courts embedded in Shanghai and Shenzhen and many other places, and there are continuous tuneups.

One of the first speeches that President Xi Jinping gave this year was about intellectual property. One thing that Mark Cohen at UC Berkeley said was that the last time that any U.S. President gave a speech about intellectual property was Abraham Lincoln. There are a lot of tuneups. There are a lot of fixes within the bureaucracy. President Xi Jinping is also trying to fix the science disbursement agencies in China. What we see is not just trying to throw more money at the problem in China, but also a much more serious effort to ask, “how are our institutions faring and how do we fix them?”

Kaiser: Yeah, it’s so astonishing to me to read work reports or speeches that are actually given by the premier or by the general secretary and the level of detail. They’re larded up with a lot of ideology and rhetoric, as well, but there’s still… There’s so much discussion of very specific policies and very specific usually technological areas that I find it very impressive.

Kaiser: I think people who’ve been looking at Li politics in China for a long time have noticed that there’s something of a Beihang clique. Beihang, of course, is the aerospace university in Beijing, and aerospace factions have described it as it’s now rising through the ranks of Chinese bureaucracy. These are very different technocrats from the ones that we saw arise in the ’80s and the ’90s. The old batch were often Russian educated hydrological engineers or chemical engineers, but you noted the significance of the fact that the party secretary of Zhejiang province, Yuan Jiajun, was previously the head of China’s Shenzhou space program, the one that put a lunar lander on and was in charge of the Mars program. Incidentally, he was also a Beihang graduate. The new Party chief in Xinjiang, although he wasn’t a Beihang graduate, was an aerospace guy, too. What can we infer from these appointments? Is technocracy back after it kind of faded? If you look at the 18th and the 19th party Congress, their Politburo standing committees were not overwhelmingly at all technocrats, but it looks like they’re back. Is that a fair reading, and what does it mean?

Dan: It’s a possible reading. I think you’re very right. By the time of Hu Jintao, there were a lot of engineers in the Politburo. I believe Hu Jintao himself was a hydraulic engineer. By the time that General Secretary Xi came onto the scene, I think his training, his formal educational training, was in economics or law, and that’s the same with Premier Li, as well. It went from being engineer dominated into this law and economics dominated, which is kind of like the scene in the U.S., as well. It is possible that we are shifting back into a more engineering focused set of cadres through the Beihang clique, through the aerospace people.

What I suspect is not going to change very substantially is the policy direction. I’m not sure how much the formal training in a lot of these fields have really influenced these leaders. I suspect that the Communist Party of the future is still mostly going to look like the present, even though they have slightly different backgrounds.

Kaiser: I want to shift gears a little bit and talk about something that is one of those things where I really, really wish I were in China to be able to get a better feel for this. I want to get your read on this. What is it like for the people who you run with, who presumably are a lot of educated elites in coastal cities? What is it like for them to look right now at the U.S.’s handling of the COVID-19 pandemic? How would you describe what it’s done to their attitudes toward the U.S. and also toward their levels of regime support in China?

Dan: I think the place to start is during the Trump administration. I mean, this is all rolled up together, the pandemic as well as President Trump, and people are probably very unhappy with the U.S., given a lot of the rhetoric from the Trump years, not just from the President, but also from the Secretary of State, as well as many other very senior administration officials.

One of the things that I’ve noticed is that a lot of folks in China have been feeling in a state of besiegement, that they feel that the U.S. is now just insulting them, maybe even trolling them, for being Chinese. When the pandemic came, this did not really validate their sense that the U.S. is a very good place to be, and so there is, just in general, I think quite a big step change in the sense of anti-American sentiment.

One of the things that I’ve heard from quite a few people that spend time in the U.S. is that they used to think of the U.S. in a very good way, and now they don’t think of the U.S. very well at all. They can’t name very many good things. Certainly, the pandemic did not substantially help. I think the way that the Chinese are thinking about the pandemic is still as a really terrible virus that they should try to avoid. The Chinese leadership spent about two years really terrifying people about this virus.

Now, perhaps you and I, Kaiser, acknowledge the virus as something that could often be pretty mild to many different people, but that is certainly not how ordinary Chinese are thinking about it when they see case numbers in the U.S. shoot up. They’re not necessarily thinking about whether hospitalizations are keeping suit. They’re just very scared of the virus itself.

Kaiser: Hospitalizations aren’t dropping, right? I mean, they are obviously, as a percentage of new cases there, it’s much, much lower, but the total number of occupied hospital beds is going up, the total capacity of… They’re not stupid about that either. I mean, and so but the thing, are there a lot of people now questioning the country’s zero COVID policy? Do they think that this is sustainable? What’s the exit strategy for this? What do they see?

Dan: I suspect that-

Kaiser: I’m not talking about Beijing. I’m talking about ordinary people.

Dan: Well, I suspect that there is no sense of an exit strategy. Most people are not eager to go overseas. They certainly miss doing work trips in the U.S. and certainly miss doing holidays in Italy, but I think, for the most part, they are very, very scared of the virus and are just going to stay home.

Now, most people I speak with, ordinary people as well as people I run with, are suffering from pretty severe cabin fever. A lot of people haven’t left even their own cities over the last two years. Their mindset is that this is the price to bear during the pandemic.

Kaiser: Right, right, right. Is it your sense that this is something that Beijing is secretly glad about? I mean, that this certainly does sort of help them along toward the more autonomy, greater social controls. It hasn’t hurt in a lot of ways, right? Is that too cynical?

Dan: Hard to speculate, but I suspect that there are a few people who are not terribly unhappy that they’ve cut out the rest of the world. For example, in a very small, tangible thing, the Olympics are happening less than 30 days from now, and the pandemic has been a great excuse for the Chinese government to bar spectators who may be holding up signs like, “Free Tibet,” that they don’t really want to see.

I think, as a broader point, one of the things that I’ve been saying since 2018 is that I’ve seen China on a trend of greater closing off, such that I thought it was quite likely that by 2049, the centenary of the country’s founding, that the country will be just closed off again, will expel all the barbarians, and it will be serenely cheerful of what the barbarians are up to in their foreign turmoils. It looks like I was only off by the wrong centenary, that’s off by the centenary of the Communist Party’s founding, and I think there are certain people who are glad that China is now learning how to close itself off from the rest of the world to be able to manage the society much more and to expel the barbarians and keep out the spiritual pollution.

Kaiser: Speaking of spiritual pollution, let’s talk about cultural stunting, which is something that you’ve written quite a bit about in this year’s letter, a couple of questions. First, you do identify a couple of things that I think we would all agree are successes, cultural successes, but there are really only two of them, TikTok and the Three Body Problem, or the trilogy, Three Body Trilogy, that is perhaps, arguably, the only successful Chinese cultural products in recent years that had any resonance outside of China. I mean, I agree, but is outside of China the only thing that counts or the thing that counts most?

Dan: I think it ought to count very, very substantially, and maybe to add onto this list a little bit, we can maybe say the art house films of Jia Zhangke, which are superb. I encourage everyone to watch his movies, Mountains May Depart, A Touch of Sin. It is drifting a little bit more deeply into niche territory once again.

I guess it’s not the only thing that counts. I think that Chinese culture domestically certainly does count to the domestic population. I think I make that point mostly to observe that when these economies like Japan, South Korea, to a lesser extent Taiwan, got rich, what they also produced were a lot of cultural products for the rest of the world to consume, especially Japan, something like the Walkman, something like the Nintendo, the manga genre. One could go on and on with a lot of the things that Japan and South Korea invented, especially. It seems like we’re still in the period of golden culture production in South Korea last year with Squid Game, as well as-

Kaiser: Squid Game, yeah.

Dan: Still a lot of K-pop stuff. I think these economies produce a lot of cultural products domestically and internationally.

Kaiser: Yeah, no argument there.

Dan: That’s right, and so it’s not a problem that China is able to keep its own domestic population satisfied, but I think it does say something about its cultural stunting that during this enormous surge of wealth creation that absolutely unprecedented, it was not able to create any cultural products that the rest of the world enjoys. I think that is entirely due to the censorship of the government.

Kaiser: Well, I would push back on entirely due.

Dan: Sure.

Kaiser: I mean, it’s certainly due in large part to it. Personally, I think that, yes, that the success of cultural exports absolutely does matter, but it is not the sine qua non. What bothers me more is that even the cultural products that are for domestic consumption, the things that do, let’s say, enjoy some success domestically, at least in terms of the money they make, they don’t measure up. I mean, I can’t look at a Chinese film that did well in China or Chinese music that does well domestically in China and honestly say that it measures up to any kind of an international or even regional standard. Most of what is produced, though, is not art. It’s shallow entertainment. You note that many people worry that the dead hand of the state has had this terrible effect on cultural production. I agree, yeah, for sure, but isn’t the focus on the economy itself, not just the top-down nature of it, but also the bottom-up obsession with productivity, the strive toward accumulation… I feel like that is one of the things that has stultified culture, that we’re just in an age where, whether out of personal avarice or out of dedication to the great project of building the nation, it prioritizes economic activity over culture.

It’s almost as though there were an inverse bell curve, where cultural production is highest when economic focus is low, so that you go back to the last golden age of Chinese cultural production, the 1980s or the early ’90s. Chinese economy was a shambles still, but it fell off as economic focus increased until maybe hopefully it will recover on the other end of that curve, right? Once overall income is high enough and the need for that laser focus on production and wealth accumulation isn’t so all consuming, maybe we’ll see culture production come back, but I couldn’t agree with you more.

I think that the stupid focus on soft power coming from the state, that there’s a deep irony in that, because soft power never comes from the state. It bleeds in from the periphery, grows up from the grassroots, and they’re not allowing it. I’ll get off my… Thank you for coming to my TED Talk.

What if we were, though, to look at domestic success and divide cultural products roughly and, yeah, problematically into high, middle, and lowbrow. There’s a lot of good lowbrow culture, right? I mean, you look at the web novels and stuff like that. I mean, maybe I’m insulting by calling it lowbrow, but it’s very popular. There are a lot of people who would defend it pretty ardently.

Dan: I agree with that, and I think, as you mentioned, I’m quite into the opera, and I think it is a very fair criticism that I’m much more interested in this highbrow culture and ignoring a lot of the smaller things. I think the most substantive pushback, I think, on this point that I’ve received is that Chinese games have done very, very well overseas. Genshin Impact is the one that everyone cites. Now, I’m not a gamer. I don’t understand these things at all, and so I think that is very legitimate to acknowledge that I have a blind spot here.

Kaiser: Indeed.

Dan: I think it’s possible to say that the lowbrow is doing very well in China. There is still a pretty nice highbrow culture, as well, in China, in terms of, for example, the art house films of Jia Zhangke, and Bi Gan I think is another guy in Guizhou, who’s doing excellent work. What I observe is that among my artist friends, especially among writers, is that they don’t feel that they can publish a lot of good work, especially this year, in 2022, because there will be a Party Congress at the end of it, and there has just been continued tightening on every front on cultural production over the last decade. I think that has driven a lot of people either mad or out of the country. These artists want to make. These artists want to produce.

I think the point about Japan, South Korea, and Taiwan is important because I don’t really have real, empirical data on this, but I think something that’s true is that economic growth tends to come hand in hand with cultural growth, as well. That’s certainly the case with these three economies. I suspect that is also the case with the United States, with Germany, with everywhere else, as well, and so to see this big decoupling between Chinese cultural production as well as Chinese growth is, in fact, very striking to me.

Kaiser: Dan, I want to wrap up here on something that we started with. I quoted you early on talking about how important it is for commentators to figure out how China can succeed rather than just report on the ways in which it appears, and much of this I would tend to dismiss as just sort of psychological self-soothing, to quote one of our earlier guests, to collapse, right? Before you moved onto the opera bit, you actually said something important that I’d like for you to expand on.

You wrote, “The modal piece of commentary on China focuses mostly on the country’s mistakes and weaknesses. In my view, much of this type of opinion is both useless and dangerous.” What do you mean by that? Why is it useless and dangerous?

Dan: It’s useless because a lot of these pieces don’t make any serious attempt to engage with the country’s strengths, and so if one wanted only to focus on the weaknesses of a country, let’s say the United States, well, one really has a lot of material, and there’s, for any particular country, beyond the obvious stuff —

Kaiser: We’re recording on January 6th, by the way, at least here in the U.S. It’s the 7th for you, audience, but today it’s still January 6th, so I’m kind of aware of weaknesses right now.

Dan: Sure.

Kaiser: Anyway, go on, right.

Dan: It’s dangerous because, I think, if these pieces are able to lull Americans into this complacency that… For example, the most cited piece of Chinese weakness is its demographic situation. China’s demographic situation is pretty dire, but I’m not so sure that gently plateauing population really does constitute the death knell for this country.

Kaiser: Right.

Dan: It is a pretty serious problem, but I don’t think it is dispositive about saying that this country just simply cannot succeed with a gently plateauing population. I think the modal piece of commentary is both dangerous as well as useless, and I think better commentary need to do a much better job of really engaging with this country’s friends to really figure out how the leadership thinks, to really figure out the scenarios in which China might succeed. You don’t necessarily have to endorse these scenarios, but that is the exercise the leadership is engaged in, and so we should have a much better idea of how this country might succeed, because I believe that China will be a major peer competitor to the U.S., and the U.S. shouldn’t either throw its hands up and do nothing or say that China will implode on its own and still do nothing. It needs to take this peer competitor much more seriously, much better understand it, and also do better itself.

Kaiser: Well, you have been providing us consistently with pieces of commentary that certainly are not of the modal type you describe. I want to thank you very much for that. I think a lot of people out there… I saw how much buzz there was when you put this thing out. A lot of people instantly wrote to me, saying, “Are you going to get Dan on the show?”

“Yes, of course, I am. Of course, I am. What do you think? I’m not stupid.” I’ve got one more thing. Somebody wanted to know. I can’t be the only reader of your letter to have been surprised that somebody who’s lived in China for as long as you only learned to ride a bike last year, and that immediately on learning to ride one, you embarked on this insanely long ride through treacherous, mountainous terrain. What’s the story there, Dan, real quick?

Dan: Well, you’re right. I haven’t learned how to ride a bike. It was just never part of my program. I’m always very mortified about that fact, but thanks, Kaiser, for letting me disclose that on your podcast.

Kaiser: Well, it was in the letter. It was in the letter, and so you’ve already made it public.

Dan: Yes, yes. The way I learned it was because I was in Beijing during the worst of the pandemic. I was in Beijing from February 1st onwards after Lunar New Year. Most of the city was shut down, and so we wondered, well, what can we do here? Two friends of mine decided that we should do some bike trips around the city. That was when I reluctantly learned how to ride a bike. It was pretty wonderful that you could ride a Meituan bike down a completely deserted Chang’anjie. I don’t think I’ll ever be able to do something like that ever again. As you say, about 12 months after I learned how to ride a bike, this was over the summer, I took a, as you say, insanely long ride from Guiyang to Chongqing. Over five days, I climbed through the mountains of the Sichuan Basin. That was, again, completely insane. I think I was absolutely not prepared for what I actually did, but I managed to get through it, and it was a fun ride.

Kaiser: Well, you’re looking good, got in shape for that. I mean, it looks really good. Dan, once again, thank you so much. I really hope that you continue this tradition. I mean, I know you’re threatening to quit, but I’m going to pester you next year, at the end of the year, anyway. It is such an important year. It’s 2022. There’s going to be a Party Congress. There’s going to be lots to write about. Anyway, let’s move on to recommendations. Before we do, let me quickly remind everyone that the Sinica podcast is powered by SupChina. If you want to help us out with the work that we do here at Sinica and the other shows in the network, the best way to do that is to subscribe to SupChina ACCESS, our daily email newsletter. It is lovingly curated with lots of thoughtful commentary by Jeremy and the crew, Lucas, and Jiayun. Check it out. It’s an excellent newsletter, and it really does help. Let’s move on to recommendations. Dan, what do you have for us?

Dan: Well, the best novel that I read this year is Bleak House by Charles Dickens.

Kaiser: Oh, yeah.

Dan: Tyler Cowen says it might be the greatest novel ever. I certainly loved Bleak House. It is fairly long, like my letters –

Kaiser: Yeah, it’s Dickens. It’s long, yeah.

Dan: And also daunting, perhaps also like my letters, but I recommend it wholeheartedly. Just the writing of Dickens is absolutely beautiful. Nearly every sentence sparkles. It’s a great plot, as well.

Kaiser: Yeah, I’ve actually, in the last year, I’ve reread A Tale of Two Cities and Great Expectations. I was going to do David Copperfield before I did Bleak House, but maybe I’ll just go right to Bleak House.

Dan: It’s, absolutely, I think, his best work, as well. In terms of nonfiction, my favorite book last year was Unfabling the East by a German historian called Jurgen Osterhammel. The subtitle is The Enlightenment’s Encounter with Asia. It’s a superb theme to think about how folks like Leibniz, folks like Voltaire were really quite obsessed with China. Leibniz thought that Chinese characters conveyed the essence of his monads. To me, that’s just a really, really good theme. Jurgen Osterhammel wrote also this other big book, a history of the extended 19th century, which is just chock-full of facts, really my favorite style of nonfiction writing, and this book also really delivers.

My favorite part of this book, Unfabling the East, was to document how the Enlightenment thinkers really tried to engage with China during the 16th, 17th, and 18th centuries, in which accounts of pure fantasy circulated with scrupulously accurate records. They really had no idea how to think about this place, and just as an epistemological matter, it is a pretty interesting account of how the Jesuits engaged with the Qing court and sent records back. It’s a very good book indeed.

Kaiser: Yeah, it sounds fantastic. Just by absolute chance, I had no idea what you were going to recommend, my recommendation for this week is a book by an Englishman, so sort of like Bleak House, but who is a Germanist, who teaches at Oxford. It’s called, The Enlightenment: The Pursuit of Happiness, which was just published in 2021. It’s by Ritchie Robertson, who is a professor at Oxford. He aims, and I’m not done with it, I’m only about a third of the way in, but from what I can tell, chiefly to discredit this idea that the Enlightenment was solely about reason, about the triumph of rational thought and to restore the importance of emotion to its rightful place in the thinking of the time among the philosophes. They took it very seriously.

He also wants to argue that the idea of happiness was really among the chief ideas and aims of most of the leading luminaries of that age. The pursuit of happiness, of course, is a phrase that we’re familiar with because of another Enlightenment figure who wrote that into our Declaration of Independence. He also really tries to widen it to encompass more than just the salons of Paris in the mid-18th century, to take it back in time and forward, the long 18th century, so there’s a lot in there on Kant and other Germans, but Hume, of course, was a Scotsman, and the American Enlightenment thinkers like Ben Franklin. It’s really excellent, so far. The writing is superb, and it’s very up to date. I haven’t read a book about the Enlightenment in a while. It’s a subject of fascination for my daughter, so it’s something she always wants to talk to me about. This has been a lot of fun.

Dan: You’ve convinced me, first of all, that this is going on top of my list. I own the book, actually, Kaiser.

Kaiser: Oh. Oh, you do?

Dan: I had no idea you were going to recommend it. It’s certainly very quickly going on my reading list.

Kaiser: Excellent. Excellent. Yeah, it’s really great. I look forward to exchanging ideas on it.

Dan, thank you once again. That was really fun. I really hope that you, again, you change your mind and you decide to write another letter, put one of these things out every year. Otherwise, what am I going to do, come next January?

Dan: It would certainly be great to make this a yearly tradition, Kaiser.

Kaiser: Please do. Please do. I think a lot of people will echo my sentiment. Thank you so much, and we’ll see you around soon, man.

Dan: Thank you.

Kaiser: The Sinica podcast is powered by SupChina and is a proud part of the Sinica Network, which is produced and edited by me, Kaiser Kuo. We would be delighted if you would drop us an email at sinica@supchina.com or, just as good, give us a rating and review on Apple Podcasts. This really does help people discover the show. Meanwhile, follow us on Twitter or Facebook at @supchinanews and make sure to check out all the shows in the Sinica Network. Thanks for listening. We’ll see you next week. Take care.