1 00:00:00,980 --> 00:00:05,060 (THEME MUSIC PLAYS) 2 00:00:15,220 --> 00:00:19,220 KAISER KUO: Is China becoming the world leader in technology? 3 00:00:19,220 --> 00:00:21,460 KELLY SIMS GALLAGHER: The United States and China 4 00:00:21,460 --> 00:00:24,140 are locked in a big power struggle. 5 00:00:24,140 --> 00:00:26,860 Innovation creates global power. 6 00:00:27,820 --> 00:00:29,460 Over the last 40 years 7 00:00:29,460 --> 00:00:32,980 China has had an unprecedented economic boom. 8 00:00:32,980 --> 00:00:35,660 SILVIA LINDTNER: To understand how China innovates 9 00:00:35,660 --> 00:00:38,820 is to rethink what innovation means in the first place. 10 00:00:38,820 --> 00:00:40,100 TRANSLATION: To the front! 11 00:00:40,100 --> 00:00:43,340 They became the manufacturer of the world, 12 00:00:43,340 --> 00:00:48,540 tinkering, innovating and even stealing the lead in some areas. 13 00:00:48,540 --> 00:00:51,380 PAUL SCANLAN: Why was China successful with 5G? 14 00:00:51,380 --> 00:00:54,220 It got the message of what could 5G do 15 00:00:54,220 --> 00:00:56,740 from health care, education, manufacturing. 16 00:01:00,260 --> 00:01:01,820 With support from the Chinese state, 17 00:01:01,820 --> 00:01:05,740 huge corporations like Huawei have spread their wings. 18 00:01:05,740 --> 00:01:07,500 JAMES MULVENON: It was their successes, 19 00:01:07,500 --> 00:01:09,740 particularly in 5G technology, 20 00:01:09,740 --> 00:01:11,340 that are really leading the way 21 00:01:11,340 --> 00:01:14,420 and are causing us to have to play catch-up to them. 22 00:01:14,420 --> 00:01:18,780 Today, a tech war between China and the West is starting to heat up. 23 00:01:21,380 --> 00:01:24,740 What does it mean for China and the rest of the world? 24 00:01:34,780 --> 00:01:39,660 This is the big annual meeting for the builders of the global internet. 25 00:01:39,660 --> 00:01:42,180 Tech companies from all over the world 26 00:01:42,180 --> 00:01:44,740 have come here to Barcelona, Spain, 27 00:01:44,740 --> 00:01:49,660 and the biggest delegation is from the Chinese tech company Huawei. 28 00:01:49,660 --> 00:01:49,940 Everybody in the world is talking about 5G. and the biggest delegation is from the Chinese tech company Huawei. 29 00:01:49,940 --> 00:01:52,740 Everybody in the world is talking about 5G. 30 00:01:52,740 --> 00:01:53,020 Everybody in the world is talking about 5G. In this room it feels like Huawei is top dog. 31 00:01:53,020 --> 00:01:56,580 In this room it feels like Huawei is top dog. 32 00:01:56,580 --> 00:01:56,820 In this room They have the biggest pavilion 33 00:01:56,820 --> 00:01:58,060 They have the biggest pavilion 34 00:01:58,060 --> 00:01:58,300 and the most sales and patents They have the biggest pavilion 35 00:01:58,300 --> 00:02:02,580 and the most sales and patents in the next-generation internet tech 36 00:02:02,580 --> 00:02:05,020 called '5G'. 37 00:02:05,020 --> 00:02:08,020 They are also just one of many Chinese tech giants 38 00:02:08,020 --> 00:02:08,260 They are also taking over global industries - 39 00:02:08,260 --> 00:02:11,180 taking over global industries - 40 00:02:11,180 --> 00:02:12,660 solar power, 41 00:02:12,660 --> 00:02:14,380 wind power, 42 00:02:14,380 --> 00:02:16,460 drones, 43 00:02:16,460 --> 00:02:17,980 batteries - 44 00:02:17,980 --> 00:02:23,980 all fields where Chinese companies have taken the lead in innovation. 45 00:02:23,980 --> 00:02:24,220 all fields where Chinese companies How is China doing it? 46 00:02:24,220 --> 00:02:26,540 How is China doing it? 47 00:02:26,540 --> 00:02:28,140 By copying others? 48 00:02:28,140 --> 00:02:28,380 Or are they finding By copying others? 49 00:02:28,380 --> 00:02:31,900 Or are they finding their own innovation secret sauce? 50 00:02:31,900 --> 00:02:36,700 Could they even surpass the US as the world's leading innovator? 51 00:02:39,140 --> 00:02:43,740 These are questions that I have discussed time and time again. 52 00:02:43,740 --> 00:02:45,140 Welcome to the Cynical podcast, 53 00:02:45,140 --> 00:02:47,260 a weekly discussion of current affairs in China. 54 00:02:47,260 --> 00:02:51,140 I'm Kaiser Kuo, a journalist and podcaster. 55 00:02:51,140 --> 00:02:54,820 I live in the States, but for 20 years I lived in China. 56 00:02:54,820 --> 00:02:57,700 I was comms director at one of their biggest tech firms 57 00:02:57,700 --> 00:03:02,540 and guitarist in China's first heavy metal band, Tang Dynasty. 58 00:03:02,540 --> 00:03:02,780 and guitarist in China's first (HEAVY METAL MUSIC PLAYS) 59 00:03:02,780 --> 00:03:06,140 (HEAVY METAL MUSIC PLAYS) 60 00:03:06,140 --> 00:03:07,540 Oh. 61 00:03:07,540 --> 00:03:08,540 Hi! Hey! 62 00:03:08,540 --> 00:03:10,100 How are you? Good to see you. Yeah! 63 00:03:10,100 --> 00:03:11,860 It's been a while. Good to see you. 64 00:03:11,860 --> 00:03:13,340 Yeah, looking forward to this. 65 00:03:13,340 --> 00:03:15,380 When I interview people for my podcast, 66 00:03:15,380 --> 00:03:20,860 I find no shortage of different takes on the rise of Chinese tech. 67 00:03:20,860 --> 00:03:24,740 The entire Chinese tech landscape and business landscape, 68 00:03:24,740 --> 00:03:25,020 I think that's actually getting stronger year on year. The entire Chinese tech landscape and business landscape, 69 00:03:25,020 --> 00:03:27,980 I think that's actually getting stronger year on year. 70 00:03:27,980 --> 00:03:28,220 I think that's actually A major misunderstanding 71 00:03:28,220 --> 00:03:29,580 A major misunderstanding 72 00:03:29,580 --> 00:03:31,820 that Americans might have about China 73 00:03:31,820 --> 00:03:34,860 is that it is mostly focused on lower-value work 74 00:03:34,860 --> 00:03:35,100 is that it is mostly focused on lower-value work as well as copying, 75 00:03:35,100 --> 00:03:36,380 as well as copying, 76 00:03:36,380 --> 00:03:39,140 but China has mostly transcended that. 77 00:03:39,140 --> 00:03:42,140 PAUL TRIOLO: China is really the only peer competitor of the US 78 00:03:42,140 --> 00:03:42,420 that has companies competing across the technology sector. PAUL TRIOLO: China is really the only peer competitor of the US 79 00:03:42,420 --> 00:03:45,500 that has companies competing across the technology sector. 80 00:03:45,500 --> 00:03:48,580 China is beating the United States in tech-heavy industries. 81 00:03:48,580 --> 00:03:51,380 It accounts for a third of global output 82 00:03:51,380 --> 00:03:52,620 in knowledge-intensive industries 83 00:03:52,620 --> 00:03:52,860 in knowledge-intensive industries compared with the United States, which accounts for 20%. 84 00:03:52,860 --> 00:03:56,020 compared with the United States, which accounts for 20%. 85 00:03:56,980 --> 00:03:59,980 Today, it might be surprising to think of China 86 00:03:59,980 --> 00:04:00,220 Today, it might be surprising as a technology leader... 87 00:04:00,220 --> 00:04:02,460 as a technology leader... 88 00:04:03,300 --> 00:04:05,020 ..but for much of history 89 00:04:05,020 --> 00:04:05,260 China WAS the world leader ..but for much of history 90 00:04:05,260 --> 00:04:08,620 China WAS the world leader in science and innovation. 91 00:04:10,180 --> 00:04:13,460 In fact, the shame of losing this position 92 00:04:13,460 --> 00:04:15,460 and the dream of regaining it 93 00:04:15,460 --> 00:04:16,940 were major motivations 94 00:04:16,940 --> 00:04:19,900 for the founders of the Chinese Communist Party. 95 00:04:21,100 --> 00:04:25,740 It all started with a widespread national awakening. 96 00:04:25,740 --> 00:04:28,820 ARCHIVE REPORTER: 3,000 students gather in front of Tiananmen 97 00:04:28,820 --> 00:04:29,060 ARCHIVE REPORTER: 3,000 students on 4 May 98 00:04:29,060 --> 00:04:30,020 on 4 May 99 00:04:30,020 --> 00:04:30,260 shouting, on 4 May 100 00:04:30,260 --> 00:04:33,100 shouting, "China is for the Chinese people." 101 00:04:33,100 --> 00:04:33,340 So, to many Chinese, shouting, "China is for the Chinese people." 102 00:04:33,340 --> 00:04:34,740 So, to many Chinese, 103 00:04:34,740 --> 00:04:36,820 they saw science and technology 104 00:04:36,820 --> 00:04:39,820 as a way of national rejuvenation 105 00:04:39,820 --> 00:04:40,020 as a way of national rejuvenation and national salvation, 106 00:04:40,020 --> 00:04:41,900 and national salvation, 107 00:04:41,900 --> 00:04:44,180 and it became a foundational principle 108 00:04:44,180 --> 00:04:44,420 and it became of the modern Chinese state. 109 00:04:44,420 --> 00:04:45,940 of the modern Chinese state. 110 00:04:45,940 --> 00:04:47,660 Advancing science and technology 111 00:04:47,660 --> 00:04:51,700 truly became a national obsession in 1978 112 00:04:51,700 --> 00:04:55,540 with the rise of the then Chinese leader, Deng Xiaoping. 113 00:04:57,380 --> 00:05:02,060 ARCHIVE REPORTER: A new beginning in US-China relations. 114 00:05:03,220 --> 00:05:08,060 Deng opened China to the world so it could learn foreign technology. 115 00:05:08,060 --> 00:05:13,940 His market reforms helped lift over 700 million people out of poverty. 116 00:05:13,940 --> 00:05:17,220 That's more than twice the population of the US. 117 00:05:17,220 --> 00:05:20,860 But this was only part of Deng's plan. 118 00:05:20,860 --> 00:05:24,340 Another goal was to reclaim China's historical place 119 00:05:24,340 --> 00:05:27,220 as world leader in science and technology 120 00:05:27,220 --> 00:05:28,780 within a generation. 121 00:05:28,780 --> 00:05:31,900 So, more than four decades later, 122 00:05:31,900 --> 00:05:34,820 how is Deng's plan going? 123 00:05:34,820 --> 00:05:35,060 To many Chinese, how is Deng's plan going? 124 00:05:35,060 --> 00:05:38,500 To many Chinese, there is no better example of success 125 00:05:38,500 --> 00:05:38,740 To many Chinese, than the tech giant Huawei, 126 00:05:38,740 --> 00:05:40,140 than the tech giant Huawei, 127 00:05:40,140 --> 00:05:43,060 but it's also at the centre of a storm of accusations 128 00:05:43,060 --> 00:05:47,940 of intellectual property theft and ties with the Chinese government. 129 00:05:47,940 --> 00:05:51,620 With all the controversy, it's really easy to overlook something - 130 00:05:51,620 --> 00:05:51,860 With all the controversy, it's really this company DOES innovate 131 00:05:51,860 --> 00:05:54,180 this company DOES innovate 132 00:05:54,180 --> 00:05:58,700 and it does it in a very different way than we do in the West. 133 00:06:07,700 --> 00:06:10,900 The first thing you notice when stepping onto a Huawei campus 134 00:06:10,900 --> 00:06:11,140 The first thing you notice is its style - 135 00:06:11,140 --> 00:06:12,460 is its style - 136 00:06:12,460 --> 00:06:18,340 Renaissance architecture, marble statues, European luxury. 137 00:06:18,340 --> 00:06:21,300 It's all unmistakably Huawei. 138 00:06:21,300 --> 00:06:23,180 But, despite the Disney vibes, 139 00:06:23,180 --> 00:06:25,580 it's the perfect place to start exploring 140 00:06:25,580 --> 00:06:28,700 how Chinese tech companies innovate. 141 00:06:28,700 --> 00:06:30,940 So, this is our library. 142 00:06:30,940 --> 00:06:34,620 Paul Scanlan is Huawei's chief technology officer. 143 00:06:34,620 --> 00:06:37,660 He was drawn to China from abroad to work in tech 144 00:06:37,660 --> 00:06:41,500 in part because he was impressed by Huawei's massive investment 145 00:06:41,500 --> 00:06:41,740 in part because he was impressed in research and development. 146 00:06:41,740 --> 00:06:44,300 in research and development. 147 00:06:45,260 --> 00:06:47,740 PAUL SCANLAN: Why I love the company, it's very simple - 148 00:06:47,740 --> 00:06:47,980 PAUL SCANLAN: Why I love it's a platform that allows me 149 00:06:47,980 --> 00:06:51,100 it's a platform that allows me 150 00:06:51,100 --> 00:06:54,900 to take a lot of the ideas I have to the world. 151 00:06:54,900 --> 00:06:55,140 to take a lot of the ideas I have The platform is an R and D platform. 152 00:06:55,140 --> 00:06:58,540 The platform is an R and D platform. 153 00:06:58,540 --> 00:06:58,780 We spend more than 22% The platform is an R and D platform. 154 00:06:58,780 --> 00:07:04,860 We spend more than 22% of our gross revenue on R and D. 155 00:07:04,860 --> 00:07:05,100 We spend more than 22% That makes Huawei 156 00:07:05,100 --> 00:07:06,380 That makes Huawei 157 00:07:06,380 --> 00:07:11,300 one of the world's largest corporate spenders on research and development. 158 00:07:11,300 --> 00:07:13,100 They've set more technical standards 159 00:07:13,100 --> 00:07:18,020 than any other organisation in the world for 5G. 160 00:07:18,020 --> 00:07:21,660 5G is an advanced wireless communication technology. 161 00:07:21,660 --> 00:07:25,540 Because it operates at higher frequencies than 4G 162 00:07:25,540 --> 00:07:31,060 it can be up to 100 times faster and also more reliable. 163 00:07:31,060 --> 00:07:34,340 It also hasn't really been fully deployed yet, 164 00:07:34,340 --> 00:07:39,180 but in the small town of Zhenyuan we can start to see what it can do. 165 00:07:40,780 --> 00:07:45,060 With 4G, our cell phone towers connect mainly to our phones, 166 00:07:45,060 --> 00:07:47,020 and there's a limit to how many devices 167 00:07:47,020 --> 00:07:47,260 and there's a limit any one tower can handle at a time. 168 00:07:47,260 --> 00:07:49,780 any one tower can handle at a time. 169 00:07:50,740 --> 00:07:52,620 5G is a dramatic improvement 170 00:07:52,620 --> 00:07:57,580 that promises to connect all sorts of devices wirelessly to the internet 171 00:07:57,580 --> 00:08:00,060 and in much greater numbers. 172 00:08:00,060 --> 00:08:02,220 In wireless communications 173 00:08:02,220 --> 00:08:05,420 data is transmitted by radio waves. 174 00:08:06,620 --> 00:08:12,460 As you progress from 3G to 4G to 5G, 175 00:08:12,460 --> 00:08:16,540 the frequency of the radio waves becomes higher and higher. 176 00:08:16,540 --> 00:08:16,780 the frequency of the radio waves This allows more data to be carried, 177 00:08:16,780 --> 00:08:19,020 This allows more data to be carried, 178 00:08:19,020 --> 00:08:22,260 enabling faster download and upload speeds. 179 00:08:22,260 --> 00:08:23,500 This is a big deal 180 00:08:23,500 --> 00:08:27,420 because so much of tech depends on internet infrastructure. 181 00:08:27,420 --> 00:08:27,660 because so much of tech As 3G progressed to 4G, 182 00:08:27,660 --> 00:08:29,700 As 3G progressed to 4G, 183 00:08:29,700 --> 00:08:33,980 increased data loads enabled simple phone calls to progress 184 00:08:33,980 --> 00:08:38,260 to ride-hailing apps, food-delivery apps, video conferences. 185 00:08:38,260 --> 00:08:40,500 The list is endless. 186 00:08:40,500 --> 00:08:45,660 Increased data loads helped build the so-called 'Internet of Things', 187 00:08:45,660 --> 00:08:47,980 allowing devices to talk to devices, 188 00:08:47,980 --> 00:08:50,420 like cars talking to cars 189 00:08:50,420 --> 00:08:55,340 or machines in a factory coordinating to become fully automated. 190 00:08:57,780 --> 00:09:00,060 PAUL SCANLAN: Why was China successful with 5G? 191 00:09:00,060 --> 00:09:03,220 It got the message of what could 5G do. 192 00:09:03,220 --> 00:09:03,500 It got the message that, if I can provide connectivity, It got the message of what could 5G do. 193 00:09:03,500 --> 00:09:07,500 It got the message that, if I can provide connectivity, 194 00:09:07,500 --> 00:09:09,740 I can collect data information. 195 00:09:09,740 --> 00:09:12,020 Based on information, AI algorithms can do things 196 00:09:12,020 --> 00:09:14,820 from health care, education, manufacturing, OK, 197 00:09:14,820 --> 00:09:15,060 from health care, education, across all of the sectors. 198 00:09:15,060 --> 00:09:16,700 across all of the sectors. 199 00:09:16,700 --> 00:09:18,900 It understood that urgently. 200 00:09:18,900 --> 00:09:22,700 Huawei is a genuinely impressive, state-of-the-art, world-class 201 00:09:22,700 --> 00:09:25,220 telecoms-equipment manufacturing company. 202 00:09:25,220 --> 00:09:28,700 And it was their successes, particularly in 5G technology, 203 00:09:28,700 --> 00:09:28,940 And it was their successes, that are really leading the way 204 00:09:28,940 --> 00:09:30,660 that are really leading the way 205 00:09:30,660 --> 00:09:33,980 and are causing us to have to play catch-up to them. 206 00:09:43,940 --> 00:09:47,780 TRANSLATION: What's being installed right now is a new 5G antenna. 207 00:09:47,780 --> 00:09:50,300 It supports a very wide range of frequencies, 208 00:09:50,300 --> 00:09:53,620 including our 700 megahertz frequency. 209 00:09:54,940 --> 00:09:57,140 China is deploying 5G 210 00:09:57,140 --> 00:10:00,500 at a scale greater than any other place in the world. 211 00:10:00,500 --> 00:10:00,780 China is exceptionally good at developing infrastructure, at a scale greater than any other place in the world. 212 00:10:00,780 --> 00:10:04,020 China is exceptionally good at developing infrastructure, 213 00:10:04,020 --> 00:10:07,540 whether it's, you know, 5G infrastructure 214 00:10:07,540 --> 00:10:07,780 whether it's, you know, 5G infrastructure or electric-grid infrastructure 215 00:10:07,780 --> 00:10:10,060 or electric-grid infrastructure 216 00:10:10,060 --> 00:10:12,300 or electric-vehicle charging infrastructure. 217 00:10:12,300 --> 00:10:18,660 It has this ability to do good planning and then also to execute. 218 00:10:18,660 --> 00:10:21,900 Authorities in China are pushing 5G hard, 219 00:10:21,900 --> 00:10:22,140 Authorities in China turning difficult-to-connect places 220 00:10:22,140 --> 00:10:23,900 turning difficult-to-connect places 221 00:10:23,900 --> 00:10:26,100 like China's mountainous Guizhou province 222 00:10:26,100 --> 00:10:30,980 into laboratories for Huawei's 5G applications. 223 00:10:30,980 --> 00:10:31,220 (INDISTINCT CHATTER) into laboratories for Huawei's 5G applications. 224 00:10:31,220 --> 00:10:33,180 (INDISTINCT CHATTER) 225 00:10:33,180 --> 00:10:35,060 YANG CHANGYU: (TRANSLATION) Out here in the mountains, 226 00:10:35,060 --> 00:10:35,300 the internet has always been poor. Out here in the mountains, 227 00:10:35,300 --> 00:10:36,940 the internet has always been poor. 228 00:10:36,940 --> 00:10:37,180 the internet has always been poor. A little bit of bad weather, a little bit of wind - no internet. 229 00:10:37,180 --> 00:10:40,820 A little bit of bad weather, a little bit of wind - no internet. 230 00:10:40,820 --> 00:10:41,060 A little bit of bad weather, It was really hard to get a signal. 231 00:10:41,060 --> 00:10:43,820 It was really hard to get a signal. 232 00:10:43,820 --> 00:10:44,020 It was really hard to get a signal. (SPEAKS IN OWN LANGUAGE) 233 00:10:44,020 --> 00:10:45,500 (SPEAKS IN OWN LANGUAGE) 234 00:10:45,500 --> 00:10:49,140 In remote places forget about it. 235 00:10:49,140 --> 00:10:50,860 But it has changed recently. 236 00:10:51,820 --> 00:10:55,460 Now with 5G we've started doing smart farming. 237 00:10:55,460 --> 00:10:56,900 (SPEAKS IN OWN LANGUAGE) 238 00:10:57,860 --> 00:11:01,460 5G technology is able to make stronger connections 239 00:11:01,460 --> 00:11:04,660 and transfer more data to more points. 240 00:11:04,660 --> 00:11:06,900 This enables places like this tea farm 241 00:11:06,900 --> 00:11:10,980 to deploy wireless sensors in hard-to-reach places. 242 00:11:11,940 --> 00:11:17,260 TRANSLATION: This tea plantation has really embraced 'smart' farming. 243 00:11:17,260 --> 00:11:18,740 (SPEAKS IN OWN LANGUAGE) 244 00:11:18,740 --> 00:11:21,940 It's been quite useful for our agricultural management. 245 00:11:23,620 --> 00:11:25,420 These sensors all help us predict 246 00:11:25,420 --> 00:11:25,660 the humidity, wind conditions These sensors all help us predict 247 00:11:25,660 --> 00:11:28,300 the humidity, wind conditions and temperature. 248 00:11:28,300 --> 00:11:28,540 the humidity, wind conditions (SPEAKS IN OWN LANGUAGE) 249 00:11:28,540 --> 00:11:30,100 (SPEAKS IN OWN LANGUAGE) 250 00:11:30,100 --> 00:11:34,620 More data leads to better modelling and better crop yields. 251 00:11:34,620 --> 00:11:37,460 Processing the information fed to it through 5G, 252 00:11:37,460 --> 00:11:39,980 a smart farming system can alert farmers 253 00:11:39,980 --> 00:11:45,300 to the optimal times to remove weeds, plant seeds and harvest crops. 254 00:11:45,300 --> 00:11:49,780 But this is just the beginning of what 5G can do. 255 00:11:49,780 --> 00:11:51,620 China says its goal 256 00:11:51,620 --> 00:11:54,020 is to ultimately move away from coal 257 00:11:54,020 --> 00:11:56,220 and into cleaner forms of energy. 258 00:11:57,180 --> 00:12:00,860 5G is a critical part of this plan as well. 259 00:12:01,820 --> 00:12:05,620 This is the Dingzhuang floating solar farm. 260 00:12:05,620 --> 00:12:08,980 Across a large swath of sea are endless solar panels, 261 00:12:08,980 --> 00:12:09,220 Across a large swath of sea each requiring monitoring. 262 00:12:09,220 --> 00:12:11,460 each requiring monitoring. 263 00:12:11,460 --> 00:12:17,620 The plant's expected total output is 550-million kilowatt hours per year. 264 00:12:17,620 --> 00:12:22,220 That's enough to power 52,000 typical American homes. 265 00:12:22,220 --> 00:12:26,540 PAUL SCANLAN: You have tens of thousands of photovoltaic cells, 266 00:12:26,540 --> 00:12:26,820 and 5G can monitor information from them PAUL SCANLAN: You have tens of thousands of photovoltaic cells, 267 00:12:26,820 --> 00:12:29,140 and 5G can monitor information from them 268 00:12:29,140 --> 00:12:31,660 more efficiently than anything else can. 269 00:12:32,940 --> 00:12:35,580 China's national 5G infrastructure 270 00:12:35,580 --> 00:12:40,500 gives a built-in advantage to this large-scale solar farm. 271 00:12:40,500 --> 00:12:43,540 Solar-panel technology is prone to malfunctions 272 00:12:43,540 --> 00:12:49,300 and one problematic panel can shut down an entire grid. 273 00:12:49,300 --> 00:12:52,140 5G enables each panel to constantly send data 274 00:12:52,140 --> 00:12:52,380 5G enables each panel to a central command station, 275 00:12:52,380 --> 00:12:54,020 to a central command station, 276 00:12:54,020 --> 00:12:54,260 making inspections more efficient to a central command station, 277 00:12:54,260 --> 00:12:58,540 making inspections more efficient and saving labour costs. 278 00:13:01,420 --> 00:13:07,340 And a solar farm can scale to a size that wouldn't be possible otherwise. 279 00:13:07,340 --> 00:13:09,140 I can now monitor them 280 00:13:09,140 --> 00:13:12,420 to see whether they're failing or when they're going to fail 281 00:13:12,420 --> 00:13:17,380 so I can optimise that prediction of maintenance for these farms. 282 00:13:17,380 --> 00:13:20,340 And there's another unexpected benefit here. 283 00:13:20,340 --> 00:13:24,300 The shade from the solar farm actually cools the surrounding water, 284 00:13:24,300 --> 00:13:28,660 helping create an ideal environment for farming shrimp and other seafood. 285 00:13:28,660 --> 00:13:28,900 helping create an ideal environment But all of this is possible 286 00:13:28,900 --> 00:13:30,140 But all of this is possible 287 00:13:30,140 --> 00:13:30,380 because the Chinese government But all of this is possible 288 00:13:30,380 --> 00:13:32,620 because the Chinese government sees the advantage 289 00:13:32,620 --> 00:13:37,220 of creating a web of connectivity across the entire country 290 00:13:37,220 --> 00:13:41,820 and is willing to use its central authority to make it a reality. 291 00:13:41,820 --> 00:13:42,060 5G cellular technology and is willing to use its central authority to make it a reality. 292 00:13:42,060 --> 00:13:44,300 5G cellular technology 293 00:13:44,300 --> 00:13:46,580 is really sort of a major leap. 294 00:13:46,580 --> 00:13:46,820 is really sort of a major leap. And it really is more of the high-tech future 295 00:13:46,820 --> 00:13:49,100 And it really is more of the high-tech future 296 00:13:49,100 --> 00:13:52,060 that we've seen in the movies and in sci-fi 297 00:13:52,060 --> 00:13:55,420 in which we're surrounded all the time by, you know, 298 00:13:55,420 --> 00:13:59,300 really high-speed data and the ability to exploit all of that. 299 00:13:59,300 --> 00:13:59,540 And that just basically means really high-speed data and the ability to exploit all of that. 300 00:13:59,540 --> 00:14:01,140 And that just basically means 301 00:14:01,140 --> 00:14:06,540 5G will enable much more precision-based applications. 302 00:14:07,500 --> 00:14:09,100 Driverless cars. 303 00:14:09,100 --> 00:14:11,500 Automated ports and factories. 304 00:14:11,500 --> 00:14:13,740 Next-generation AI. 305 00:14:13,740 --> 00:14:13,980 What all of these things Next-generation AI. 306 00:14:13,980 --> 00:14:15,500 What all of these things have in common 307 00:14:15,500 --> 00:14:20,620 is that they can't fully develop until 5G infrastructure is built. 308 00:14:20,620 --> 00:14:20,860 is that they can't fully develop And, as with most new infrastructure, 309 00:14:20,860 --> 00:14:23,100 And, as with most new infrastructure, 310 00:14:23,100 --> 00:14:29,100 we don't yet know how it will change society for better or worse. 311 00:14:29,100 --> 00:14:33,500 (ANDROID CHATTERS) 312 00:14:34,460 --> 00:14:37,500 Why is it that a Chinese company is leading the way 313 00:14:37,500 --> 00:14:39,740 in building the next generation of the internet? 314 00:14:41,460 --> 00:14:43,940 There's no doubt that the Chinese Communist Party 315 00:14:43,940 --> 00:14:47,180 uses its central authority to force change 316 00:14:47,180 --> 00:14:50,780 in ways that aren't possible in Western democracies. 317 00:14:50,780 --> 00:14:55,340 But another key reason is the intense work culture. 318 00:14:55,340 --> 00:15:00,020 It can be brutal, with six-day weeks and 12-hour days being the norm. 319 00:15:06,380 --> 00:15:11,460 Western observers often call the Huawei company culture militaristic. 320 00:15:11,460 --> 00:15:11,700 Western observers often call the That's probably part of the story. 321 00:15:11,700 --> 00:15:14,940 That's probably part of the story. 322 00:15:14,940 --> 00:15:16,580 But there's also something else. 323 00:15:16,580 --> 00:15:16,820 Huawei tries to motivate But there's also something else. 324 00:15:16,820 --> 00:15:19,060 Huawei tries to motivate its employees 325 00:15:19,060 --> 00:15:23,420 in ways that probably would not fly in Western industry. 326 00:15:23,420 --> 00:15:27,980 Wang Wenjun leads the training for new recruits. 327 00:15:30,860 --> 00:15:34,020 TRANSLATION: This is our training area. 328 00:15:34,020 --> 00:15:36,540 I think it's different than the training facilities 329 00:15:36,540 --> 00:15:38,780 in most other companies. 330 00:15:38,780 --> 00:15:40,980 (SPEAKS IN OWN LANGUAGE) 331 00:15:40,980 --> 00:15:44,300 Our facilities are outdoors, on top of a mountain. 332 00:15:48,780 --> 00:15:54,100 This slogan... How would I translate it for foreigners? 333 00:15:54,100 --> 00:15:56,820 "If you want to take more responsibilities, 334 00:15:56,820 --> 00:15:57,100 "If you want to take more responsibilities, "you must work harder in the training." 335 00:15:57,100 --> 00:16:00,180 "you must work harder in the training." 336 00:16:02,140 --> 00:16:03,860 I look at these slogans 337 00:16:03,860 --> 00:16:07,820 and think about how out of place they would seem at a Western company. 338 00:16:08,780 --> 00:16:13,860 The messages are about enduring hardships and winning battles. 339 00:16:15,180 --> 00:16:17,660 Huawei was founded by Ren Zhengfei, 340 00:16:17,660 --> 00:16:21,260 who started his career in the Chinese army. 341 00:16:21,260 --> 00:16:22,900 He then went on to found Huawei, 342 00:16:22,900 --> 00:16:27,500 whose name literally means 'Chinese achievement'. 343 00:16:30,180 --> 00:16:33,420 What I find interesting is how the posters around campus 344 00:16:33,420 --> 00:16:37,380 echo the propaganda style of the Chinese government. 345 00:16:37,380 --> 00:16:37,660 They talk about the importance of sacrifice and hard work echo the propaganda style of the Chinese government. 346 00:16:37,660 --> 00:16:40,540 They talk about the importance of sacrifice and hard work 347 00:16:40,540 --> 00:16:44,340 in aiding China's technological development. 348 00:16:45,300 --> 00:16:49,820 A lot of what Beijing tries to do is it is trying to use ideology 349 00:16:49,820 --> 00:16:50,100 A lot of what Beijing tries to do is it is trying to use ideology to corral a lot of the dynamic firms and people in China 350 00:16:50,100 --> 00:16:54,860 to corral a lot of the dynamic firms and people in China 351 00:16:54,860 --> 00:16:58,100 to pursue the goals that it really wants to have. 352 00:16:59,420 --> 00:17:03,260 WANG WENJUN: (TRANSLATION) My job is to train the young people 353 00:17:03,260 --> 00:17:06,580 to develop the spirit of bitter struggle, 354 00:17:06,580 --> 00:17:09,660 to train everyone to become full with vigour. 355 00:17:09,660 --> 00:17:14,580 Only when you have suffered can you understand the sweet things in life. 356 00:17:14,580 --> 00:17:19,140 People live good lives now, they never have experienced the struggle. 357 00:17:19,140 --> 00:17:24,020 The point of this place is to give them a taste of that. 358 00:17:24,020 --> 00:17:25,540 The people here 359 00:17:25,540 --> 00:17:31,020 train to connect not just China but every corner of the world. 360 00:17:31,020 --> 00:17:32,820 This is in line with Chinese state goals, 361 00:17:32,820 --> 00:17:36,620 which seek to export Chinese technology globally. 362 00:17:37,580 --> 00:17:39,460 KELLY SIMS GALLAGHER: In countries in Africa 363 00:17:39,460 --> 00:17:39,700 KELLY SIMS GALLAGHER: you will mostly see 364 00:17:39,700 --> 00:17:40,940 you will mostly see 365 00:17:40,940 --> 00:17:41,140 Chinese equipment everywhere. you will mostly see 366 00:17:41,140 --> 00:17:43,420 Chinese equipment everywhere. 367 00:17:43,420 --> 00:17:45,820 I was recently in Ethiopia 368 00:17:45,820 --> 00:17:47,540 and I was struck 369 00:17:47,540 --> 00:17:50,020 because I kept having this out-of-body experience. 370 00:17:50,020 --> 00:17:52,300 I felt like I was in China. 371 00:17:52,300 --> 00:17:54,500 The subway was constructed by China. 372 00:17:54,500 --> 00:17:58,460 The subway cars have Chinese words in them. 373 00:17:58,460 --> 00:18:01,780 The United States is not visibly present 374 00:18:01,780 --> 00:18:04,860 in a lot of developing countries around the world. 375 00:18:04,860 --> 00:18:09,780 Huawei was bringing 5G and its applications to the entire world, 376 00:18:09,780 --> 00:18:13,740 and then the US government started to take notice. 377 00:18:15,060 --> 00:18:18,820 CHUCK SCHUMER: Huawei and ZTE are both state-backed companies. 378 00:18:18,820 --> 00:18:21,140 Their efforts to enter the American market 379 00:18:21,140 --> 00:18:22,460 is a great example 380 00:18:22,460 --> 00:18:25,820 of how China attempts to steal our private data 381 00:18:25,820 --> 00:18:26,060 of how China and intellectual property. 382 00:18:26,060 --> 00:18:27,980 and intellectual property. 383 00:18:27,980 --> 00:18:29,380 In 2018 384 00:18:29,380 --> 00:18:31,100 Huawei CFO, Meng Wanzhou, 385 00:18:31,100 --> 00:18:32,980 the daughter of Huawei founder, Ren Zhengfei, 386 00:18:32,980 --> 00:18:38,580 was apprehended in Canada under suspicion of violating US sanctions. 387 00:18:41,100 --> 00:18:44,260 TRANSLATION: The whole world sees this for what it is. 388 00:18:44,260 --> 00:18:48,860 America is trying to strangle China's high-tech companies. 389 00:18:48,860 --> 00:18:49,100 America is trying to strangle In May 2019 390 00:18:49,100 --> 00:18:50,900 In May 2019 391 00:18:50,900 --> 00:18:51,140 the US government placed Huawei In May 2019 392 00:18:51,140 --> 00:18:54,700 the US government placed Huawei on the so-called 'Entity List', 393 00:18:54,700 --> 00:18:54,940 the US government placed Huawei a registry of companies 394 00:18:54,940 --> 00:18:56,180 a registry of companies 395 00:18:56,180 --> 00:19:00,700 that are effectively banned from doing business in the US. 396 00:19:00,700 --> 00:19:04,780 James Mulvenon is one of the architects of this policy change. 397 00:19:04,780 --> 00:19:06,820 JAMES MULVENON: The day that Huawei and its subsidiaries 398 00:19:06,820 --> 00:19:07,060 JAMES MULVENON: The day were placed on the Entity List 399 00:19:07,060 --> 00:19:08,460 were placed on the Entity List 400 00:19:08,460 --> 00:19:12,620 was, frankly, a day of real sense of personal accomplishment for me. 401 00:19:12,620 --> 00:19:15,180 I had been writing about Huawei for 25 years 402 00:19:15,180 --> 00:19:15,420 I had been writing about Huawei and informing the US government 403 00:19:15,420 --> 00:19:17,060 and informing the US government 404 00:19:17,060 --> 00:19:20,260 about many different features of Huawei's relationship 405 00:19:20,260 --> 00:19:22,660 with the Chinese military, with the Chinese government, 406 00:19:22,660 --> 00:19:26,220 its activities abroad that I thought were suspicious and questionable. 407 00:19:26,220 --> 00:19:28,740 A country is always going to be extremely protective 408 00:19:28,740 --> 00:19:30,780 of its telecommunications infrastructure. 409 00:19:30,780 --> 00:19:34,100 It is the way it maintains control over its territory 410 00:19:34,100 --> 00:19:38,900 and connects its leaders, its police forces, its military, 411 00:19:38,900 --> 00:19:39,140 and during the Cold War and connects its leaders, its police forces, its military, 412 00:19:39,140 --> 00:19:40,420 and during the Cold War 413 00:19:40,420 --> 00:19:40,660 and during the Cold War the United States government 414 00:19:40,660 --> 00:19:42,940 was the way in which the United States government 415 00:19:42,940 --> 00:19:45,460 maintained command and control over weapons 416 00:19:45,460 --> 00:19:47,940 that could have destroyed the world hundreds of times over. 417 00:19:48,900 --> 00:19:50,380 Mulvenon contends that, 418 00:19:50,380 --> 00:19:53,100 while there hasn't been any proof - nothing in public at least - 419 00:19:53,100 --> 00:19:53,340 while there hasn't been any proof - of Huawei's spying in the US, 420 00:19:53,340 --> 00:19:55,580 of Huawei's spying in the US, 421 00:19:55,580 --> 00:20:00,340 there is no way of ensuring a Chinese company's independence from Beijing. 422 00:20:00,340 --> 00:20:01,980 To protect against this threat, 423 00:20:01,980 --> 00:20:06,500 the US government has mandated Huawei equipment across the country 424 00:20:06,500 --> 00:20:06,740 the US government has mandated be ripped out and replaced. 425 00:20:06,740 --> 00:20:09,220 be ripped out and replaced. 426 00:20:11,460 --> 00:20:13,700 In the town of South Canaan, Pennsylvania, 427 00:20:13,700 --> 00:20:16,500 local telecom company CEO, Jim Kail, 428 00:20:16,500 --> 00:20:19,820 is overseeing the removal of Huawei equipment 429 00:20:19,820 --> 00:20:22,060 from the internet infrastructure. 430 00:20:22,060 --> 00:20:24,660 But now he faces a new problem - 431 00:20:24,660 --> 00:20:29,340 alternate equipment is three times more expensive than Huawei's. 432 00:20:29,340 --> 00:20:29,580 alternate equipment is three times Without Huawei 433 00:20:29,580 --> 00:20:30,820 Without Huawei 434 00:20:30,820 --> 00:20:31,060 there is no cost-effective way to Without Huawei 435 00:20:31,060 --> 00:20:35,980 there is no cost-effective way to connect this region to the internet. 436 00:20:35,980 --> 00:20:38,100 JIM KAIL: Our allegiance is to our own country here, 437 00:20:38,100 --> 00:20:41,060 and that's very important, I take that very seriously, 438 00:20:41,060 --> 00:20:42,900 and the rest of us, as rural Americans, 439 00:20:42,900 --> 00:20:43,140 we're patriotic, and the rest of us, as rural Americans, 440 00:20:43,140 --> 00:20:44,700 we're patriotic, 441 00:20:44,700 --> 00:20:48,180 and yeah, so, we...we did think long and hard about that 442 00:20:48,180 --> 00:20:48,420 and yeah, so, we...we did think before we made that decision. 443 00:20:48,420 --> 00:20:49,660 before we made that decision. 444 00:20:49,660 --> 00:20:49,900 before we made that decision. Had about 1,300 of these units deployed in customers' homes. 445 00:20:49,900 --> 00:20:53,500 Had about 1,300 of these units deployed in customers' homes. 446 00:20:53,500 --> 00:20:56,740 Over the course of the last couple of years in particular 447 00:20:56,740 --> 00:21:00,660 there was the push to ban the product and... 448 00:21:00,660 --> 00:21:04,100 Which eventually led to the mandate where we had to rip and replace. 449 00:21:04,100 --> 00:21:05,940 And we're now in the process of doing that. 450 00:21:05,940 --> 00:21:08,500 We're taking...swapping out the Huawei solution 451 00:21:08,500 --> 00:21:08,740 We're taking...swapping out with a different solution. 452 00:21:08,740 --> 00:21:10,420 with a different solution. 453 00:21:10,420 --> 00:21:10,660 And, actually, that, with a different solution. 454 00:21:10,660 --> 00:21:12,260 And, actually, that, when you think about it, 455 00:21:12,260 --> 00:21:14,780 it's actually a windfall for China, right? 456 00:21:14,780 --> 00:21:17,020 So, you're actually taking equipment out there, you're ripping it out 457 00:21:17,020 --> 00:21:20,660 and you're going out and buying new equipment, right? 458 00:21:20,660 --> 00:21:22,260 Buying it from China, right? 459 00:21:22,260 --> 00:21:24,740 I mean, it's the vendors, the vendors we do business with, 460 00:21:24,740 --> 00:21:26,060 they're getting their parts from China. 461 00:21:26,060 --> 00:21:29,380 And, so, China is getting a windfall out of this. 462 00:21:29,380 --> 00:21:31,180 For many observers in America, 463 00:21:31,180 --> 00:21:32,940 the most challenging thing about Huawei 464 00:21:32,940 --> 00:21:33,180 the most challenging thing is that they can make products 465 00:21:33,180 --> 00:21:34,500 is that they can make products 466 00:21:34,500 --> 00:21:34,740 that no Western firm is that they can make products 467 00:21:34,740 --> 00:21:37,220 that no Western firm has been able to replicate, 468 00:21:37,220 --> 00:21:37,460 that no Western firm especially when it comes to cost. 469 00:21:37,460 --> 00:21:39,700 especially when it comes to cost. 470 00:21:40,500 --> 00:21:45,340 And without Huawei there is simply no cost-effective way right now 471 00:21:45,340 --> 00:21:47,860 to build 5G across much of America, 472 00:21:47,860 --> 00:21:50,340 something that lawyer Eric Atria discovered 473 00:21:50,340 --> 00:21:54,300 when he and his family moved to rural Florida. 474 00:21:55,260 --> 00:21:56,620 We moved out here 475 00:21:56,620 --> 00:21:59,540 and found out that there literally wasn't internet out here. 476 00:21:59,540 --> 00:21:59,780 and found out that there literally We couldn't get any internet. 477 00:21:59,780 --> 00:22:01,220 We couldn't get any internet. 478 00:22:01,220 --> 00:22:01,460 We couldn't get any internet. And the only place in our yard that we could actually get 479 00:22:01,460 --> 00:22:03,420 And the only place in our yard that we could actually get 480 00:22:03,420 --> 00:22:06,380 one bar of service from our cell phone provider 481 00:22:06,380 --> 00:22:06,620 one bar of service is this log, 482 00:22:06,620 --> 00:22:07,900 is this log, 483 00:22:07,900 --> 00:22:09,500 so, my wife called it 'logging on'. 484 00:22:09,500 --> 00:22:13,220 And you only get one bar of signal standing here. 485 00:22:13,220 --> 00:22:15,220 So, my wife was out here the other day 486 00:22:15,220 --> 00:22:17,740 holding her phone in the air as a personal hotspot 487 00:22:17,740 --> 00:22:20,980 and her laptop in the other hand so she could do a work meeting. 488 00:22:24,860 --> 00:22:26,620 (YELLS) Actually not working! 489 00:22:26,620 --> 00:22:31,220 The United States has only built about 100,000 5G base stations 490 00:22:31,220 --> 00:22:35,500 compared to the over 2 million in China. 491 00:22:35,500 --> 00:22:37,940 KID: Now it's working! 492 00:22:37,940 --> 00:22:40,340 Why is China so much more successful 493 00:22:40,340 --> 00:22:44,100 at creating affordable, cutting-edge tech? 494 00:22:44,100 --> 00:22:45,060 VICTOR SEOW: So, historically, 495 00:22:45,060 --> 00:22:49,860 a country's capacity to produce was itself viewed as innovative. 496 00:22:49,860 --> 00:22:50,140 So, in imperial times, China's capacity to a country's capacity to produce was itself viewed as innovative. 497 00:22:50,140 --> 00:22:52,860 So, in imperial times, China's capacity to 498 00:22:52,860 --> 00:22:53,140 produce these wonderful goods, this porcelain, this silk, So, in imperial times, China's capacity to 499 00:22:53,140 --> 00:22:56,340 produce these wonderful goods, this porcelain, this silk, 500 00:22:56,340 --> 00:23:01,420 was inspiring for those who were able to view them, to see them. 501 00:23:01,420 --> 00:23:01,660 was inspiring for those who were able to view them, to see them. And it's only closer to our present 502 00:23:01,660 --> 00:23:04,300 And it's only closer to our present 503 00:23:04,300 --> 00:23:09,060 where we see this distinction between innovation and production. 504 00:23:10,420 --> 00:23:14,740 Shenzhen is the manufacturing epicentre of China. 505 00:23:14,740 --> 00:23:18,540 It's also the home town of most of the Chinese tech giants, 506 00:23:18,540 --> 00:23:20,300 including Huawei. 507 00:23:26,700 --> 00:23:30,100 So, Shenzhen was declared, famously, by Deng Xiaoping 508 00:23:30,100 --> 00:23:30,380 So, Shenzhen was declared, famously, by Deng Xiaoping a 'special economic zone' in the 1980s. 509 00:23:30,380 --> 00:23:33,620 a 'special economic zone' in the 1980s. 510 00:23:34,900 --> 00:23:36,580 Before 1979 511 00:23:36,580 --> 00:23:41,500 Shenzhen was a small fishing village of 30,000 people. 512 00:23:41,500 --> 00:23:45,780 Then it was designated China's first special economic zone - 513 00:23:45,780 --> 00:23:47,500 an experiment with capitalism 514 00:23:47,500 --> 00:23:50,780 that set it apart from the centrally planned economic model 515 00:23:50,780 --> 00:23:51,020 that set it apart from in the rest of the country. 516 00:23:51,020 --> 00:23:52,980 in the rest of the country. 517 00:23:52,980 --> 00:23:54,260 From the beginning 518 00:23:54,260 --> 00:23:59,860 authorities viewed mastery of manufacturing as key to innovation. 519 00:23:59,860 --> 00:24:00,100 authorities viewed mastery of Flash forward to today, 520 00:24:00,100 --> 00:24:01,580 Flash forward to today, 521 00:24:01,580 --> 00:24:01,820 Shenzhen is the manufacturing Flash forward to today, 522 00:24:01,820 --> 00:24:05,820 Shenzhen is the manufacturing powerhouse of the world. 523 00:24:07,140 --> 00:24:11,660 TRANSLATION: In 1997 there were many foreign investors here. 524 00:24:11,660 --> 00:24:11,940 TRANSLATION: In 1997 there were many foreign investors here. It was the peak of the 'reform and opening' years. 525 00:24:11,940 --> 00:24:15,260 It was the peak of the 'reform and opening' years. 526 00:24:15,260 --> 00:24:18,460 Lots of foreign capital was flowing into China, 527 00:24:18,460 --> 00:24:20,340 and this gave us lots of opportunities 528 00:24:20,340 --> 00:24:20,580 and this gave us to learn and improve ourselves. 529 00:24:20,580 --> 00:24:23,300 to learn and improve ourselves. 530 00:24:23,300 --> 00:24:24,780 To walk around Shenzhen 531 00:24:24,780 --> 00:24:27,780 is to see a tech hub which is very different 532 00:24:27,780 --> 00:24:31,500 from Silicon Valley's software start-up culture. 533 00:24:31,500 --> 00:24:36,740 At the centre of it all are the factories and the art of making. 534 00:24:36,740 --> 00:24:38,620 Maker spaces are everywhere, 535 00:24:38,620 --> 00:24:41,020 where people produce, tinker, hack 536 00:24:41,020 --> 00:24:44,260 and, most famously, copy foreign tech. 537 00:24:44,260 --> 00:24:46,500 DAN WANG: A lot of developing countries got to be richer 538 00:24:46,500 --> 00:24:49,740 by copying and, indeed, stealing from advanced countries. 539 00:24:49,740 --> 00:24:49,980 by copying and, indeed, stealing That was the case 540 00:24:49,980 --> 00:24:51,220 That was the case 541 00:24:51,220 --> 00:24:51,460 when the United States was a major IP violator That was the case 542 00:24:51,460 --> 00:24:54,020 when the United States was a major IP violator 543 00:24:54,020 --> 00:24:56,060 back in the 19th century, 544 00:24:56,060 --> 00:24:56,260 back in the 19th century, mostly from the United Kingdom. 545 00:24:56,260 --> 00:24:58,100 mostly from the United Kingdom. 546 00:24:59,060 --> 00:25:03,020 Zhang Jiuzhou is a product designer in Shenzhen. 547 00:25:03,020 --> 00:25:07,580 He challenges the whole idea of what IP theft means. 548 00:25:07,580 --> 00:25:09,860 (SPEAKS IN OWN LANGUAGE) 549 00:25:09,860 --> 00:25:13,860 TRANSLATION: A lot of people talk about 'knock-off' products in China, 550 00:25:13,860 --> 00:25:16,420 like all the fake iPhones made here. 551 00:25:16,420 --> 00:25:16,660 like all the fake iPhones made here. But I see 'knock-off' as a neutral word, 552 00:25:16,660 --> 00:25:19,700 But I see 'knock-off' as a neutral word, 553 00:25:19,700 --> 00:25:19,940 But I see 'knock-off' which means learning and evolving. 554 00:25:19,940 --> 00:25:22,380 which means learning and evolving. 555 00:25:22,380 --> 00:25:22,620 Something that's associated with intellectual property, with patents, which means learning and evolving. 556 00:25:22,620 --> 00:25:26,260 Something that's associated with intellectual property, with patents, 557 00:25:26,260 --> 00:25:29,180 arguably with a very Western-centric definition 558 00:25:29,180 --> 00:25:29,420 arguably with a very Western-centric definition of what counts as innovation, 559 00:25:29,420 --> 00:25:30,940 of what counts as innovation, 560 00:25:30,940 --> 00:25:32,780 which is often rooted in this idea 561 00:25:32,780 --> 00:25:37,540 that there is an authentic, original, 562 00:25:37,540 --> 00:25:40,060 a charismatic technology creator 563 00:25:40,060 --> 00:25:43,580 who came up with this fantastic, completely novel idea 564 00:25:43,580 --> 00:25:46,100 that's revolutionising a whole industry, 565 00:25:46,100 --> 00:25:49,580 and we don't really think of something like modification 566 00:25:49,580 --> 00:25:49,820 and we don't really think or slow paced-change as innovation. 567 00:25:49,820 --> 00:25:52,820 or slow paced-change as innovation. 568 00:25:52,820 --> 00:25:54,420 And, so, what I think is really important 569 00:25:54,420 --> 00:25:57,220 for us to understand how China innovates 570 00:25:57,220 --> 00:25:59,900 is to rethink what innovation means in the first place. 571 00:25:59,900 --> 00:26:00,140 is to rethink what innovation means In my years working in tech in China 572 00:26:00,140 --> 00:26:01,740 In my years working in tech in China 573 00:26:01,740 --> 00:26:05,460 I saw it become the workshop of the world. 574 00:26:05,460 --> 00:26:09,060 Like a nation of busy chefs, China was making things at turbo speed, 575 00:26:09,060 --> 00:26:09,300 Like a nation of busy chefs, China building world-class skills. 576 00:26:09,300 --> 00:26:11,540 building world-class skills. 577 00:26:11,540 --> 00:26:14,580 But then something else started to happen. 578 00:26:14,580 --> 00:26:14,860 As there was increasing clustering of manufacturing centres But then something else started to happen. 579 00:26:14,860 --> 00:26:19,220 As there was increasing clustering of manufacturing centres 580 00:26:19,220 --> 00:26:20,940 around different industries, 581 00:26:20,940 --> 00:26:21,140 around different industries, a lot of learning occurred. 582 00:26:21,140 --> 00:26:22,700 a lot of learning occurred. 583 00:26:22,700 --> 00:26:25,820 I remember going through a factory in China 584 00:26:25,820 --> 00:26:27,540 and one of the ways 585 00:26:27,540 --> 00:26:30,420 they had been able to cut the cost of the solar panel 586 00:26:30,420 --> 00:26:34,980 was to figure out a way to slice the ingot more thinly. 587 00:26:34,980 --> 00:26:40,780 China is masterful at these types of process innovations, 588 00:26:40,780 --> 00:26:46,660 and, over time, also began to really gain innovation capabilities. 589 00:26:46,660 --> 00:26:49,580 The spaces where China has world-leading tech 590 00:26:49,580 --> 00:26:54,140 tend to be the places where China holds manufacturing dominance. 591 00:26:54,140 --> 00:26:58,700 Chinese battery companies make 77% of the world's batteries. 592 00:26:58,700 --> 00:27:03,820 China's firms produce 80% of the components in solar panels. 593 00:27:03,820 --> 00:27:04,060 China's firms produce 80% Huawei followed a similar path. 594 00:27:04,060 --> 00:27:05,580 Huawei followed a similar path. 595 00:27:05,580 --> 00:27:09,740 After producing telecom equipment for foreign companies for years, 596 00:27:09,740 --> 00:27:11,380 their manufacturing experience 597 00:27:11,380 --> 00:27:14,300 helped them develop better and cheaper products. 598 00:27:15,260 --> 00:27:18,700 If China had never become the workshop of the world, 599 00:27:18,700 --> 00:27:22,500 I doubt we'd even be talking about Chinese tech giants. 600 00:27:22,500 --> 00:27:25,460 DAN WANG: And a lot of the manufacturing workforce in China 601 00:27:25,460 --> 00:27:25,700 DAN WANG: And a lot of has expanded very significantly, 602 00:27:25,700 --> 00:27:28,460 has expanded very significantly, 603 00:27:28,460 --> 00:27:30,020 in part at the expense of the US. 604 00:27:30,020 --> 00:27:32,180 As we see from COVID-19, 605 00:27:32,180 --> 00:27:35,100 a lot of the US manufacturers, in its early days, 606 00:27:35,100 --> 00:27:39,100 struggled to make something as simple as masks for people 607 00:27:39,100 --> 00:27:39,340 struggled to make something as well as cotton swabs for testing. 608 00:27:39,340 --> 00:27:41,580 as well as cotton swabs for testing. 609 00:27:41,580 --> 00:27:43,340 The contrast that we see in China 610 00:27:43,340 --> 00:27:46,740 is that manufacturers were able to respond really quickly. 611 00:27:49,420 --> 00:27:50,900 Manufacturing dominance 612 00:27:50,900 --> 00:27:55,300 creates spillover advantages for Chinese entrepreneurs, 613 00:27:55,300 --> 00:27:58,780 advantages that show up in unexpected places. 614 00:27:59,740 --> 00:28:04,660 TRANSLATION: In 2014 I built a 10-megawatt Bitcoin mine 615 00:28:04,660 --> 00:28:04,900 in the Inner Mongolia province. I built a 10-megawatt Bitcoin mine 616 00:28:04,900 --> 00:28:07,140 in the Inner Mongolia province. 617 00:28:07,140 --> 00:28:10,700 At that time, it was one of China's largest facilities. 618 00:28:10,700 --> 00:28:10,940 At that time, it was one of China's largest facilities. Now in 2021 619 00:28:10,940 --> 00:28:13,380 Now in 2021 620 00:28:13,380 --> 00:28:18,180 I'm building the same kind of facility here in the desert... 621 00:28:18,180 --> 00:28:18,420 I'm building the same kind (SPEAKS IN OWN LANGUAGE) 622 00:28:18,420 --> 00:28:19,900 (SPEAKS IN OWN LANGUAGE) 623 00:28:19,900 --> 00:28:20,140 ..except this time around (SPEAKS IN OWN LANGUAGE) 624 00:28:20,140 --> 00:28:23,740 ..except this time around it's 60 times larger. 625 00:28:23,740 --> 00:28:28,340 It's like coming full circle, just in a new location. 626 00:28:28,340 --> 00:28:28,580 It's like coming full circle, Kevin Pan is the CEO of Poolin, 627 00:28:28,580 --> 00:28:30,900 Kevin Pan is the CEO of Poolin, 628 00:28:30,900 --> 00:28:35,100 one of the largest Bitcoin mining operations in the world. 629 00:28:35,100 --> 00:28:39,020 A Bitcoin mining facility is similar to a data centre. 630 00:28:39,020 --> 00:28:43,580 Powerful computers operate 24/7 to run the Bitcoin network. 631 00:28:43,580 --> 00:28:44,940 For security 632 00:28:44,940 --> 00:28:45,180 the network depends For security 633 00:28:45,180 --> 00:28:47,420 the network depends on the participation of computers 634 00:28:47,420 --> 00:28:48,860 scattered around the world 635 00:28:48,860 --> 00:28:52,420 to collectively keep track of Bitcoin ownership. 636 00:28:52,420 --> 00:28:54,940 The system issues Bitcoins to participants 637 00:28:54,940 --> 00:28:59,220 by rewarding those who solve complex cryptographic puzzles, 638 00:28:59,220 --> 00:29:04,060 an activity that requires huge amounts of electricity. 639 00:29:04,060 --> 00:29:08,300 Bitcoin mining was once dominated by US miners, 640 00:29:08,300 --> 00:29:12,940 but, as so often happens, China was quick to get into the game 641 00:29:12,940 --> 00:29:18,900 and grew to hold as much as a 75% share of the industry. 642 00:29:18,900 --> 00:29:21,100 I'm especially interested in asking Kevin 643 00:29:21,100 --> 00:29:27,820 what he thought gave China that edge in this and in so many other areas. 644 00:29:28,780 --> 00:29:30,540 KEVIN PAN: (TRANSLATION) It's almost unfathomable 645 00:29:30,540 --> 00:29:32,860 how quick the supply chain is in Shenzhen. 646 00:29:32,860 --> 00:29:37,300 In America, it takes days to receive prototypes for your designs. 647 00:29:37,300 --> 00:29:41,620 In Shenzhen, if you send blueprints to a factory in the morning, 648 00:29:41,620 --> 00:29:44,940 they'll deliver a prototype by the afternoon. 649 00:29:44,940 --> 00:29:49,380 It's a paradise for any entrepreneur working with hardware. 650 00:29:49,380 --> 00:29:52,500 In other places you just can't do this, only in Shenzhen. 651 00:29:54,380 --> 00:29:58,660 Kevin built his massive Bitcoin operation in China, 652 00:29:58,660 --> 00:30:02,140 and then the hammer came down. 653 00:30:02,140 --> 00:30:05,540 China's central bank cracked down on cryptocurrencies, 654 00:30:05,540 --> 00:30:09,060 calling all crypto-related activities illegal. 655 00:30:09,060 --> 00:30:13,140 It happened around the same time as a wide-ranging tech crackdown 656 00:30:13,140 --> 00:30:17,740 that also hit social-media companies and online loan providers. 657 00:30:18,740 --> 00:30:20,980 As powerful as the Chinese government is 658 00:30:20,980 --> 00:30:24,700 when it comes to rapidly deploying infrastructure like 5G, 659 00:30:24,700 --> 00:30:24,940 when it comes to rapidly deploying it can be equally harsh, 660 00:30:24,940 --> 00:30:27,220 it can be equally harsh, 661 00:30:27,220 --> 00:30:30,340 and, essentially, with the same stroke of a pen 662 00:30:30,340 --> 00:30:30,580 and, essentially, it banned Kevin's entire industry, 663 00:30:30,580 --> 00:30:33,260 it banned Kevin's entire industry, 664 00:30:33,260 --> 00:30:33,500 citing the environmental consequences it banned Kevin's entire industry, 665 00:30:33,500 --> 00:30:36,940 citing the environmental consequences of Bitcoin mining. 666 00:30:40,220 --> 00:30:42,460 TRANSLATION: Ever since we got shut down, 667 00:30:42,460 --> 00:30:47,180 the company's been in a tough position. 668 00:30:47,180 --> 00:30:47,420 the company's So, what happened to Kevin? 669 00:30:47,420 --> 00:30:49,660 So, what happened to Kevin? 670 00:30:49,660 --> 00:30:52,100 Turns out he wasn't about to give up so easily. 671 00:30:52,100 --> 00:30:55,660 He just pulled up stakes and started over in a new home... 672 00:30:56,620 --> 00:31:00,380 ..where he has been welcomed with open arms. 673 00:31:01,340 --> 00:31:05,660 I love Bitcoin because it's bringing freedom to people. 674 00:31:05,660 --> 00:31:05,900 I love Bitcoin because You can protect your own assets 675 00:31:05,900 --> 00:31:07,780 You can protect your own assets 676 00:31:07,780 --> 00:31:12,300 and nobody want...nobody could ever, ever, could take it from you. 677 00:31:12,300 --> 00:31:12,540 and nobody want...nobody could So, where does it actually exist? 678 00:31:12,540 --> 00:31:15,300 So, where does it actually exist? 679 00:31:15,300 --> 00:31:17,740 It's on the internet. 680 00:31:17,740 --> 00:31:20,700 Kevin's not alone in jumping ship. 681 00:31:20,700 --> 00:31:23,900 Many entrepreneurs caught in Chinese tech crackdowns 682 00:31:23,900 --> 00:31:24,140 Many entrepreneurs have relocated to America. 683 00:31:24,140 --> 00:31:26,380 have relocated to America. 684 00:31:26,380 --> 00:31:28,100 They're here because the Chinese government 685 00:31:28,100 --> 00:31:31,340 takes an active role in steering innovation. 686 00:31:31,340 --> 00:31:31,580 takes an active role Policymakers funnel talent and money 687 00:31:31,580 --> 00:31:34,540 Policymakers funnel talent and money 688 00:31:34,540 --> 00:31:37,540 into industries they view as important. 689 00:31:37,540 --> 00:31:38,820 At the same time 690 00:31:38,820 --> 00:31:44,180 they shut down industries they view as wasteful, risky or frivolous. 691 00:31:50,620 --> 00:31:52,540 KEVIN PAN: (TRANSLATION) When China shut us down, 692 00:31:52,540 --> 00:31:55,580 we immediately complied with the law. 693 00:31:55,580 --> 00:31:55,820 we immediately But in our hearts we felt hopeless. 694 00:31:55,820 --> 00:31:59,380 But in our hearts we felt hopeless. 695 00:31:59,380 --> 00:32:02,820 We spent so long building so much, 696 00:32:02,820 --> 00:32:03,060 and it was all torn down We spent so long building so much, 697 00:32:03,060 --> 00:32:06,540 and it was all torn down in a single night. 698 00:32:06,540 --> 00:32:09,780 We either had to give up or start from scratch. 699 00:32:12,260 --> 00:32:14,980 Today Kevin and his team of Bitcoin miners 700 00:32:14,980 --> 00:32:15,220 Today are meeting with Kenneth Winkles... 701 00:32:15,220 --> 00:32:16,900 are meeting with Kenneth Winkles... 702 00:32:16,900 --> 00:32:18,020 Kevin, good morning! 703 00:32:18,020 --> 00:32:21,340 ..head of a local economic development organisation. 704 00:32:21,340 --> 00:32:22,500 Good to see you again, sir. 705 00:32:22,500 --> 00:32:25,580 How many total megawatts will you be utilising 706 00:32:25,580 --> 00:32:25,820 How many total megawatts once you're up and running? 707 00:32:25,820 --> 00:32:27,500 once you're up and running? 708 00:32:27,500 --> 00:32:27,740 Yeah, phase one once you're up and running? 709 00:32:27,740 --> 00:32:29,980 Yeah, phase one is about 100 megawatts. 710 00:32:29,980 --> 00:32:30,860 OK. 711 00:32:30,860 --> 00:32:33,980 I don't believe that what happened in China 712 00:32:33,980 --> 00:32:34,220 I don't believe will happen in the United States. 713 00:32:34,220 --> 00:32:35,460 will happen in the United States. 714 00:32:35,460 --> 00:32:35,660 I really don't. will happen in the United States. 715 00:32:35,660 --> 00:32:36,580 I really don't. 716 00:32:36,580 --> 00:32:36,780 I really don't. We've got a very stable 717 00:32:36,780 --> 00:32:38,780 We've got a very stable 718 00:32:38,780 --> 00:32:38,980 type of government, We've got a very stable 719 00:32:38,980 --> 00:32:40,020 type of government, 720 00:32:40,020 --> 00:32:42,020 whether you're a red or a blue state. 721 00:32:42,020 --> 00:32:43,260 You happen to be in a red state. 722 00:32:43,260 --> 00:32:43,460 You happen to be in a red state. Texas is business-friendly, 723 00:32:43,460 --> 00:32:45,060 Texas is business-friendly, 724 00:32:45,060 --> 00:32:48,140 so, you're not going to see somebody come in and say, 725 00:32:48,140 --> 00:32:51,100 "No, you can't do that in my backyard." 726 00:32:51,100 --> 00:32:51,820 Yeah. OK. 727 00:32:51,820 --> 00:32:52,060 Yeah. Crypto was banned in China 728 00:32:52,060 --> 00:32:54,620 Crypto was banned in China 729 00:32:54,620 --> 00:32:57,940 because the Chinese state uses its strong central authority 730 00:32:57,940 --> 00:33:00,980 to guide innovation as it sees fit. 731 00:33:00,980 --> 00:33:04,820 But is it just driving out the disruptors and original thinkers 732 00:33:04,820 --> 00:33:05,060 But is it just driving out the needed to foster true innovation? 733 00:33:05,060 --> 00:33:08,340 needed to foster true innovation? 734 00:33:08,340 --> 00:33:11,340 There's no shortage of strong opinions. 735 00:33:11,340 --> 00:33:11,620 I've seen many times in Chinese bookstores, There's no shortage of strong opinions. 736 00:33:11,620 --> 00:33:13,380 I've seen many times in Chinese bookstores, 737 00:33:13,380 --> 00:33:15,460 there are many, many books in those bookstores that say, 738 00:33:15,460 --> 00:33:15,700 there are many, many books "Where is China's Steve Jobs?" 739 00:33:15,700 --> 00:33:17,460 "Where is China's Steve Jobs?" 740 00:33:17,460 --> 00:33:17,700 And this is a question "Where is China's Steve Jobs?" 741 00:33:17,700 --> 00:33:20,020 And this is a question that China itself is asking. 742 00:33:20,020 --> 00:33:20,260 And this is a question that China itself is asking. And, so, I do believe, ultimately, 743 00:33:20,260 --> 00:33:21,940 And, so, I do believe, ultimately, 744 00:33:21,940 --> 00:33:24,940 that it's the combination of the American free market 745 00:33:24,940 --> 00:33:25,180 that it's the combination with our democratic system 746 00:33:25,180 --> 00:33:26,420 with our democratic system 747 00:33:26,420 --> 00:33:26,660 that ultimately with our democratic system 748 00:33:26,660 --> 00:33:28,900 that ultimately is best for fostering innovation. 749 00:33:28,900 --> 00:33:31,420 Beijing's vision of the technological future 750 00:33:31,420 --> 00:33:33,860 is a little bit different from California's. 751 00:33:33,860 --> 00:33:35,580 In its view, a lot of social-media companies 752 00:33:35,580 --> 00:33:38,300 are actually creating a lot of social unrest. 753 00:33:38,300 --> 00:33:41,620 And, frankly, it doesn't see a great use for cryptocurrency, 754 00:33:41,620 --> 00:33:45,300 which is almost explicitly designed to be out of state control. 755 00:33:45,300 --> 00:33:45,580 There are certainly efforts by the government which is almost explicitly designed to be out of state control. 756 00:33:45,580 --> 00:33:47,900 There are certainly efforts by the government 757 00:33:47,900 --> 00:33:49,540 to redirect talent and capital 758 00:33:49,540 --> 00:33:52,940 toward so-called 'hard tech' sectors 759 00:33:52,940 --> 00:33:53,180 toward so-called 'hard tech' sectors such as climate tech, such as electric vehicles, etcetera. 760 00:33:53,180 --> 00:33:57,500 such as climate tech, such as electric vehicles, etcetera. 761 00:33:58,460 --> 00:34:03,460 China's government guides innovation into areas that it deems important. 762 00:34:03,460 --> 00:34:08,300 But can a single institution always choose the right winners? 763 00:34:08,300 --> 00:34:08,540 But can a single institution Either way, 764 00:34:08,540 --> 00:34:09,300 Either way, 765 00:34:09,300 --> 00:34:09,540 it does seem to be working Either way, 766 00:34:09,540 --> 00:34:13,100 it does seem to be working for a number of key industries, 767 00:34:13,100 --> 00:34:16,220 and the Chinese model of a heavier state hand 768 00:34:16,220 --> 00:34:19,180 seems to be gaining influence worldwide. 769 00:34:20,140 --> 00:34:23,100 The challenge of competing with China 770 00:34:23,100 --> 00:34:23,340 The challenge has caused people to reassess 771 00:34:23,340 --> 00:34:25,060 has caused people to reassess 772 00:34:25,060 --> 00:34:28,740 whether the market alone can create and mobilise 773 00:34:28,740 --> 00:34:31,260 the resources for innovation in the United States. 774 00:34:31,260 --> 00:34:33,580 And the belief, I think, is that it can't, 775 00:34:33,580 --> 00:34:37,220 especially when you're competing with a country where the government 776 00:34:37,220 --> 00:34:41,580 has been able to mobilise such vast sums of resources in the same areas. 777 00:34:41,580 --> 00:34:45,540 And, so, the US government has put its own thumb on the scale 778 00:34:45,540 --> 00:34:48,940 with the 2022 passage of the CHIPS and Science Act 779 00:34:48,940 --> 00:34:53,020 injecting public money into the semiconductor industry. 780 00:34:53,980 --> 00:34:58,580 Today's computer chips are easily the most complex devices ever made, 781 00:34:58,580 --> 00:35:02,900 and they're also seen now as a critical strategic resource. 782 00:35:02,900 --> 00:35:05,140 Besides trying to jumpstart domestic production, 783 00:35:05,140 --> 00:35:06,660 the US and the West 784 00:35:06,660 --> 00:35:12,100 are also trying to keep the means of production out of China's hands. 785 00:35:13,220 --> 00:35:14,980 DAN WANG: Without advanced semiconductors 786 00:35:14,980 --> 00:35:19,540 there is no way that China can have a thriving technological industry. 787 00:35:19,540 --> 00:35:23,260 China is now out of the starting gate in semiconductors, 788 00:35:23,260 --> 00:35:24,780 but, in the most rosy view, 789 00:35:24,780 --> 00:35:28,860 it is probably at least 5 to 15 years behind the US 790 00:35:28,860 --> 00:35:32,100 in terms of the most crucial semiconductor technologies. 791 00:35:33,060 --> 00:35:35,940 Computer chips are solid pieces of silicon and metal 792 00:35:35,940 --> 00:35:39,380 with literally billions of tiny electronic switches 793 00:35:39,380 --> 00:35:39,620 with literally billions packed into a very small space. 794 00:35:39,620 --> 00:35:42,380 packed into a very small space. 795 00:35:42,380 --> 00:35:44,100 Since the 1970s 796 00:35:44,100 --> 00:35:47,460 the key to increasing the power and speed of computers 797 00:35:47,460 --> 00:35:51,820 has been tied directly to the density of those switches. 798 00:35:51,820 --> 00:35:54,900 As they've shrunk down to the atomic scale, 799 00:35:54,900 --> 00:35:56,380 the technology required to make them 800 00:35:56,380 --> 00:35:59,700 has become increasingly costly and complex. 801 00:35:59,700 --> 00:36:02,140 Pushing the envelope of chip innovation 802 00:36:02,140 --> 00:36:03,740 is like building a pyramid - 803 00:36:03,740 --> 00:36:06,140 everything rests on what came below, 804 00:36:06,140 --> 00:36:10,020 and China's pyramid is really just getting started. 805 00:36:11,260 --> 00:36:14,700 JAMES MULVENON: One of the most dramatic consequences 806 00:36:14,700 --> 00:36:14,940 JAMES MULVENON: One of the most of the trade war with China 807 00:36:14,940 --> 00:36:16,580 of the trade war with China 808 00:36:16,580 --> 00:36:19,820 was the exposure of China's dependence 809 00:36:19,820 --> 00:36:23,900 on high-quality and high-end semiconductor chips 810 00:36:23,900 --> 00:36:27,180 from the United States and Japan and Korea and Taiwan. 811 00:36:27,180 --> 00:36:30,940 And, I would say, right now that catch-up in the semiconductor space 812 00:36:30,940 --> 00:36:33,820 is probably the single greatest challenge 813 00:36:33,820 --> 00:36:36,540 that the Chinese technology sphere currently faces 814 00:36:36,540 --> 00:36:38,860 and the highest hill that they have to climb. 815 00:36:40,420 --> 00:36:43,220 This is a Huawei cell-phone factory. 816 00:36:43,220 --> 00:36:44,220 Just a few years ago 817 00:36:44,220 --> 00:36:47,540 Huawei was on track to become the leading maker of mobile phones 818 00:36:47,540 --> 00:36:47,780 Huawei was on track to become in the world. 819 00:36:47,780 --> 00:36:49,300 in the world. 820 00:36:49,300 --> 00:36:55,740 Then the US government cut off their access to advanced semiconductors. 821 00:36:55,740 --> 00:36:57,980 DAN WANG: Huawei has had a lot of different problems 822 00:36:57,980 --> 00:37:00,260 with trying to maintain production. 823 00:37:00,260 --> 00:37:03,780 There's simply no way to be a major technology provider 824 00:37:03,780 --> 00:37:07,020 if you don't have the most advanced semiconductors in the world. 825 00:37:07,020 --> 00:37:07,300 if you don't have the most advanced semiconductors in the world. And, so, at this point, Huawei's revenues have collapsed 826 00:37:07,300 --> 00:37:09,780 And, so, at this point, Huawei's revenues have collapsed 827 00:37:09,780 --> 00:37:12,900 mostly because its smartphone business has collapsed. 828 00:37:12,900 --> 00:37:13,140 mostly because its smartphone It was for one period 829 00:37:13,140 --> 00:37:15,020 It was for one period 830 00:37:15,020 --> 00:37:15,260 the second-largest smartphone maker It was for one period 831 00:37:15,260 --> 00:37:17,500 the second-largest smartphone maker in the world. 832 00:37:17,500 --> 00:37:19,740 Today, it is just barely in the running 833 00:37:19,740 --> 00:37:22,940 for being the top-10 largest smartphone makers in the world. 834 00:37:24,420 --> 00:37:26,020 In Chandler, Arizona, 835 00:37:26,020 --> 00:37:28,500 I visit an Intel semiconductor factory, 836 00:37:28,500 --> 00:37:28,740 I visit an Intel also known as a 'fab'. 837 00:37:28,740 --> 00:37:30,980 also known as a 'fab'. 838 00:37:33,020 --> 00:37:37,060 Here Intel is building a new state-of-the-art facility. 839 00:37:39,580 --> 00:37:43,580 If any one place represents the front line of the tech war today 840 00:37:43,580 --> 00:37:43,820 If any one place represents this is it. 841 00:37:43,820 --> 00:37:45,260 this is it. 842 00:37:45,260 --> 00:37:45,460 Welcome to Fab 42. this is it. 843 00:37:45,460 --> 00:37:47,380 Welcome to Fab 42. 844 00:37:48,340 --> 00:37:52,180 You're in one of Intel's most advanced factories. 845 00:37:53,140 --> 00:37:56,180 Very large outfit here that we run 846 00:37:56,180 --> 00:38:00,420 with a lot of different people doing various activities. 847 00:38:00,420 --> 00:38:05,220 Semiconductors process the data that run through digital devices. 848 00:38:05,220 --> 00:38:08,380 HUGH GREEN: We start our process with a bare silicon wafer. 849 00:38:08,380 --> 00:38:12,460 It looks like a pizza, 300 millimetres in diameter. 850 00:38:13,420 --> 00:38:14,900 Digital electronics work 851 00:38:14,900 --> 00:38:18,980 by processing our voice, the videos we watch and the data we collect 852 00:38:18,980 --> 00:38:23,940 into a binary code that can be transmitted between us. 853 00:38:23,940 --> 00:38:26,820 This is the language of computers and the internet. 854 00:38:27,780 --> 00:38:32,460 What creates this code are switches called 'transistors'. 855 00:38:32,460 --> 00:38:36,140 At the heart of computers today are tiny wafers of silicon 856 00:38:36,140 --> 00:38:39,420 that can hold more than 100 billion transistors 857 00:38:39,420 --> 00:38:39,660 that can hold in just a few square centimetres. 858 00:38:39,660 --> 00:38:42,300 in just a few square centimetres. 859 00:38:44,140 --> 00:38:48,460 The switches of today's computers are only a few atoms wide, 860 00:38:48,460 --> 00:38:51,340 only visible under an electron microscope. 861 00:38:51,340 --> 00:38:53,940 Arranged by millions of minuscule networks, 862 00:38:53,940 --> 00:38:58,420 they look like farmland viewed from 30,000 feet. 863 00:38:58,420 --> 00:39:01,540 The connections between them are just as tiny. 864 00:39:01,540 --> 00:39:01,820 On this package itself there are 1.1 million interconnects. The connections between them are just as tiny. 865 00:39:01,820 --> 00:39:06,180 On this package itself there are 1.1 million interconnects. 866 00:39:06,180 --> 00:39:07,620 And of those interconnects 867 00:39:07,620 --> 00:39:07,860 And of those interconnects about 980,000 of those interconnects are at Intel state-of-the-art. 868 00:39:07,860 --> 00:39:11,940 about 980,000 of those interconnects are at Intel state-of-the-art. 869 00:39:11,940 --> 00:39:14,820 Each new generation of fabrication machinery 870 00:39:14,820 --> 00:39:15,060 Each new generation is an advance on what came before it. 871 00:39:15,060 --> 00:39:17,300 is an advance on what came before it. 872 00:39:18,220 --> 00:39:19,980 Starting in the 1970s, 873 00:39:19,980 --> 00:39:24,260 Moore's law predicted that chip technology would improve so rapidly 874 00:39:24,260 --> 00:39:29,340 that the number of transistors on a chip would double every 18 months. 875 00:39:29,340 --> 00:39:29,580 that the number of transistors on This has held mostly true so far, 876 00:39:29,580 --> 00:39:32,220 This has held mostly true so far, 877 00:39:32,220 --> 00:39:32,460 making it almost impossible This has held mostly true so far, 878 00:39:32,460 --> 00:39:36,860 making it almost impossible for newcomers to the game to catch up 879 00:39:36,860 --> 00:39:37,100 making it almost impossible without relying on equipment 880 00:39:37,100 --> 00:39:38,460 without relying on equipment 881 00:39:38,460 --> 00:39:42,980 produced by just a few standard-setting companies. 882 00:39:42,980 --> 00:39:45,220 KEYVAN ESFARJANI: Imagine you have billions of transistors 883 00:39:45,220 --> 00:39:46,620 on a...you know, your fingernail. 884 00:39:46,620 --> 00:39:48,420 If a small defect - 885 00:39:48,420 --> 00:39:53,620 and I mean small defects being like a size of a molecule or even a DNA - 886 00:39:53,620 --> 00:39:53,860 and I mean small defects being like a size of a molecule or even a DNA - the whole thing breaks apart. 887 00:39:53,860 --> 00:39:55,380 the whole thing breaks apart. 888 00:39:55,380 --> 00:39:56,740 It's not a stretch to say 889 00:39:56,740 --> 00:39:59,500 that here the US is relearning a lesson 890 00:39:59,500 --> 00:39:59,740 that here that China is already committed to. 891 00:39:59,740 --> 00:40:02,100 that China is already committed to. 892 00:40:02,100 --> 00:40:02,340 It's a reminder that China is already committed to. 893 00:40:02,340 --> 00:40:04,900 It's a reminder of what America may have lost 894 00:40:04,900 --> 00:40:08,820 in allowing the decline of its own manufacturing sector, 895 00:40:08,820 --> 00:40:13,860 but it's also a testament to some of America's strengths. 896 00:40:13,860 --> 00:40:14,140 You have about 100 PhDs working in this facility, but it's also a testament to some of America's strengths. 897 00:40:14,140 --> 00:40:17,220 You have about 100 PhDs working in this facility, 898 00:40:17,220 --> 00:40:17,460 You have about 100 PhDs and we do care about diversity - 899 00:40:17,460 --> 00:40:19,340 and we do care about diversity - 900 00:40:19,340 --> 00:40:20,580 diversity of thought, 901 00:40:20,580 --> 00:40:20,820 diversity of thought, diversity of opinion, diversity of views. 902 00:40:20,820 --> 00:40:23,980 diversity of opinion, diversity of views. 903 00:40:23,980 --> 00:40:25,340 As I look around 904 00:40:25,340 --> 00:40:29,140 I see top scientists from many countries working here. 905 00:40:29,140 --> 00:40:32,740 They come from Europe, India and even China 906 00:40:32,740 --> 00:40:37,740 to provide different perspectives on how to solve difficult problems. 907 00:40:37,740 --> 00:40:41,300 This is something that I never really saw in Chinese research labs, 908 00:40:41,300 --> 00:40:41,540 This is something that I never and it's one of the many reasons 909 00:40:41,540 --> 00:40:43,100 and it's one of the many reasons 910 00:40:43,100 --> 00:40:46,860 why Chinese companies are having such a difficult time 911 00:40:46,860 --> 00:40:49,100 catching up in semiconductors. 912 00:40:51,860 --> 00:40:53,260 In this facility 913 00:40:53,260 --> 00:40:53,500 the most cutting-edge lithography In this facility 914 00:40:53,500 --> 00:40:57,020 the most cutting-edge lithography machines are from the Netherlands, 915 00:40:57,020 --> 00:40:57,260 the most cutting-edge lithography the chip designs are from California, 916 00:40:57,260 --> 00:40:59,900 the chip designs are from California, 917 00:40:59,900 --> 00:41:04,140 minerals for chip-making processes come from all over the world. 918 00:41:04,140 --> 00:41:07,500 Producing something as complicated as a semiconductor 919 00:41:07,500 --> 00:41:10,260 requires international cooperation. 920 00:41:10,260 --> 00:41:13,780 There isn't a country in the world that can do it alone. 921 00:41:13,780 --> 00:41:14,020 There isn't a country in the world But now China will have to try. 922 00:41:14,020 --> 00:41:16,700 But now China will have to try. 923 00:41:18,140 --> 00:41:23,300 In late 2022 the US government expanded its tech war on China. 924 00:41:23,300 --> 00:41:23,540 In late 2022 the US government New regulations 925 00:41:23,540 --> 00:41:24,860 New regulations 926 00:41:24,860 --> 00:41:29,220 forced all Americans working in the semiconductor industry in China 927 00:41:29,220 --> 00:41:32,060 to resign or renounce their citizenship. 928 00:41:32,060 --> 00:41:35,380 The restrictions are only expanding in scope. 929 00:41:35,380 --> 00:41:39,180 What started as an attempt to choke select companies like Huawei 930 00:41:39,180 --> 00:41:44,140 seems to be expanding to the entire Chinese tech sector. 931 00:41:44,140 --> 00:41:44,420 It was a very comprehensive set of rules seems to be expanding to the entire Chinese tech sector. 932 00:41:44,420 --> 00:41:47,700 It was a very comprehensive set of rules 933 00:41:47,700 --> 00:41:47,940 It was a very comprehensive designed really to allow the US 934 00:41:47,940 --> 00:41:50,860 designed really to allow the US 935 00:41:50,860 --> 00:41:51,100 designed really to allow the US to control just exactly what capability China would have 936 00:41:51,100 --> 00:41:56,060 to control just exactly what capability China would have 937 00:41:56,060 --> 00:41:58,300 across the semiconductor manufacturing space. 938 00:41:58,300 --> 00:42:04,180 And, so, China faces a really significant problem. 939 00:42:04,180 --> 00:42:09,180 No country has ever attempted to recreate, for example, 940 00:42:09,180 --> 00:42:13,140 all the pieces of the semiconductor manufacturing supply chain 941 00:42:13,140 --> 00:42:13,380 all the pieces of the semiconductor on its own. 942 00:42:13,380 --> 00:42:14,180 on its own. 943 00:42:15,140 --> 00:42:16,820 Back at Huawei 944 00:42:16,820 --> 00:42:19,380 the company is on a war footing. 945 00:42:19,380 --> 00:42:22,660 Cut off from the technology it needs to power their products, 946 00:42:22,660 --> 00:42:22,900 Cut off from the technology it needs they know they need to move fast. 947 00:42:22,900 --> 00:42:25,460 they know they need to move fast. 948 00:42:25,460 --> 00:42:25,700 The way the Chinese typically respond to efforts like that they know they need to move fast. 949 00:42:25,700 --> 00:42:29,060 The way the Chinese typically respond to efforts like that 950 00:42:29,060 --> 00:42:32,980 is they redouble their efforts to innovate internally. 951 00:42:32,980 --> 00:42:33,220 is they redouble their efforts (SPEAKS IN OWN LANGUAGE) 952 00:42:33,220 --> 00:42:34,260 (SPEAKS IN OWN LANGUAGE) 953 00:42:34,260 --> 00:42:35,580 TRANSLATION: As you may know, 954 00:42:35,580 --> 00:42:38,500 our supply of semiconductors was choked off. 955 00:42:38,500 --> 00:42:38,740 our supply of semiconductors was choked off. We can't make them. 956 00:42:38,740 --> 00:42:41,700 We can't make them. 957 00:42:41,700 --> 00:42:43,020 But I can feel it - 958 00:42:43,020 --> 00:42:47,300 the whole of society is working to find a way out of this problem. 959 00:42:47,300 --> 00:42:51,180 Of course, here in this lab, we are focused on our own problems. 960 00:42:51,180 --> 00:42:54,380 But you could say we're working on the fundamental problem 961 00:42:54,380 --> 00:42:54,620 But you could say we're working this country faces. 962 00:42:54,620 --> 00:42:56,060 this country faces. 963 00:42:57,940 --> 00:43:01,620 How do we get around the pressure that has been put on us? 964 00:43:01,620 --> 00:43:01,860 How do we get around the pressure (SPEAKS IN OWN LANGUAGE) 965 00:43:01,860 --> 00:43:03,420 (SPEAKS IN OWN LANGUAGE) 966 00:43:03,420 --> 00:43:08,220 Is another route possible that doesn't rely on semiconductors? 967 00:43:09,180 --> 00:43:11,380 In the Huawei R and D labs 968 00:43:11,380 --> 00:43:14,300 researchers study how to use light to process data 969 00:43:14,300 --> 00:43:14,540 researchers study how to use light rather than using traditional chips. 970 00:43:14,540 --> 00:43:17,020 rather than using traditional chips. 971 00:43:17,020 --> 00:43:17,260 Losing access rather than using traditional chips. 972 00:43:17,260 --> 00:43:19,980 Losing access to the most cutting-edge chips 973 00:43:19,980 --> 00:43:20,220 Losing access has slowed down the progress 974 00:43:20,220 --> 00:43:21,540 has slowed down the progress 975 00:43:21,540 --> 00:43:25,100 of many of the most prominent Chinese tech giants. 976 00:43:26,060 --> 00:43:28,700 Or has it lit a fire? 977 00:43:28,700 --> 00:43:30,620 In August 2023 978 00:43:30,620 --> 00:43:32,380 Huawei stunned the world 979 00:43:32,380 --> 00:43:32,620 by announcing a new phone Huawei stunned the world 980 00:43:32,620 --> 00:43:37,180 by announcing a new phone with a 7-nanometre Chinese-made chip, 981 00:43:37,180 --> 00:43:42,940 more advanced than anything anyone thought China could make so quickly. 982 00:43:42,940 --> 00:43:47,100 It was a real morale boost for the Chinese tech sector. 983 00:43:51,940 --> 00:43:54,820 GAO JIALIN:(TRANSLATION) China is trying to be held back. 984 00:43:54,820 --> 00:43:58,700 But we will innovate ourselves out of the problem. 985 00:43:58,700 --> 00:44:02,700 The rise of Chinese tech giants has changed the world. 986 00:44:02,700 --> 00:44:07,260 China's model of innovation created world-leading companies. 987 00:44:07,260 --> 00:44:11,660 While many insist that China did not come by these gains honestly, 988 00:44:11,660 --> 00:44:15,380 relying on intellectual property theft and predatory pricing, 989 00:44:15,380 --> 00:44:15,620 relying on intellectual property they still did it. 990 00:44:15,620 --> 00:44:17,340 they still did it. 991 00:44:17,340 --> 00:44:17,580 And they did it with a different they still did it. 992 00:44:17,580 --> 00:44:20,780 And they did it with a different ethos and manufacturing focus 993 00:44:20,780 --> 00:44:25,580 that challenges expectations of how innovation happens. 994 00:44:25,580 --> 00:44:27,580 They rose in the time of globalisation, 995 00:44:27,580 --> 00:44:30,900 but their very ascent triggered a tech war. 996 00:44:30,900 --> 00:44:32,220 KELLY SIMS GALLAGHER: Trying to hamstring 997 00:44:32,220 --> 00:44:32,460 KELLY SIMS GALLAGHER: China's ability to innovate 998 00:44:32,460 --> 00:44:33,900 China's ability to innovate 999 00:44:33,900 --> 00:44:37,700 is really the wrong answer to the question. 1000 00:44:37,700 --> 00:44:40,820 And if the question is, "How can the US become more competitive?" 1001 00:44:40,820 --> 00:44:44,540 it needs to get its own house in order and compete. 1002 00:44:47,900 --> 00:44:50,740 (YELLS) Mum! It's not working! 1003 00:44:50,740 --> 00:44:50,980 PAUL TRIOLO: The reason (YELLS) Mum! It's not working! 1004 00:44:50,980 --> 00:44:52,980 PAUL TRIOLO: The reason you can have that iPhone 1005 00:44:52,980 --> 00:44:53,220 PAUL TRIOLO: The reason with so much capability in your hand 1006 00:44:53,220 --> 00:44:55,580 with so much capability in your hand 1007 00:44:55,580 --> 00:44:57,500 IS the result of globalisation. 1008 00:44:57,500 --> 00:44:57,740 So, that iPhone represents parts IS the result of globalisation. 1009 00:44:57,740 --> 00:45:02,020 So, that iPhone represents parts coming from all over the world. 1010 00:45:02,020 --> 00:45:04,540 So, what we've seen over the last two years 1011 00:45:04,540 --> 00:45:07,060 is, essentially, a reversal of that process. 1012 00:45:07,060 --> 00:45:07,300 is, essentially, What comes next? I don't know. 1013 00:45:07,300 --> 00:45:09,300 What comes next? I don't know. 1014 00:45:09,300 --> 00:45:09,540 But I believe that Chinese technology What comes next? I don't know. 1015 00:45:09,540 --> 00:45:13,820 But I believe that Chinese technology will continue to change the world, 1016 00:45:13,820 --> 00:45:16,340 for better or worse. 1017 00:45:20,660 --> 00:45:22,700 (THEME MUSIC PLAYS) 1018 00:45:37,940 --> 00:45:39,940 Captions by Red Bee Media 1019 00:45:39,940 --> 00:45:42,140 Copyright Australian Broadcasting Corporation