Arthur Kroeber: preference

Transcript context

…velopment at a high speed in China, and number two, enhance our control of society. They have been proved absolutely correct in that bet on both counts. They had a drive to network the entire society. They started to invest in very, very early, initially just through ordinary fixed line telecoms networks, but then they were very early in mobile and then getting government network systems that communicated across the whole country. They invested huge amounts in that. It's been, I think, very beneficial to the rise of all kinds of things. It's why basically they were able to create an entire Internet of their own with its own companies that doesn't have the participation of the US global companies and is on its own terms basically just as successful. What they also recognized was that if everyone's on the Internet, and we have people watching the Internet, then we know what everyone is thinking all the time. We can see that. This is the holy grail of Chinese leadership since the second century B.C. They sit on top of this vast empire. It's great. They have all this territory, all of this wealth is flowing in. But they have no idea what people are thinking or doing far away. This has bedeviled every Chinese administration for thousands of years. Even into the 1990s, it was an authoritarian system but it was very fragmented and it was very, very hard for the central government to really have any idea what was going on. Now we have a panopticon because everyone is online. If we control the online universe, then we see everything and we're pretty confident that we can keep the discourse under control. They won that bet. The comparable move that they are making today, which I think is severely underappreciated, is that they believe in the power of electrification. Electricity has been around for a long time. Still in most countries it only accounts for about 15-20% of the total final consumption of energy. It is still actually a minor player in the global energy equation, despite having been around for 150 years and being very critical in a lot of applications. China very early on recognized that they needed a lot more electric power. The original reason was very prosaic. They had a lot of power shortages in the early 2000s that were making it hard for their factories to run. They said, “Oh, we have to build a lot more generating capacity, most of it fueled by coal, just so we can keep our factories running.” That was the first thing. Then they started to think about it a little bit more and they started to say, “Actually, what do we want? Well, we know we're failing in this drive to make cars with industrial combustion engines. It looks like we're never going to be able to crack that nut and have our own Toyota or General Motors. But no one's making electric cars. Maybe we can be the first to do electric cars” So they said, “We got to do that.” Then they said, “Oh, we need to enhance our domestic transport infrastructure. Wouldn't it be great if we had a giant high speed rail network just like Japan, except we're 20 times larger than Japan, so it has to be 20 times as big. Let's do that. estic transport infrastructure. Wouldn't it be great if we had a giant high speed rail network just like Japan, except we're 20 times larger than Japan, so it has to be 20 times as big. Let's do that. By the way, this is all going to be electrified.”So they created a couple of core hub industries. The premise for them was that you need gigantic quantities of electricity to get these things working. If everyone has an electric car and everyone's charging their battery, it’s a huge draw. If everyone is riding on electric trains instead of on planes, it's a huge draw on electricity. So we need to have a much more comprehensive idea about what our electricity grid is going to look like to support these industries that we want for other reasons. Well, where do we want this electricity to come from? Well, coal. Yeah, we have a lot of coal, but it's really dirty. It's a climate problem. It's a very severe domestic air pollution problem. This is really dirty. So from an energy security and pollution standpoint, we're probably better off doing renewables because any other source of fuel for thermal power plants, we're gonna have to import. We don't have enough natural gas. We can build nuclear, but that's hard to scale and we don't have enough uranium. If we build a renewable powered domestic electricity grid, we will be self-sufficient forever. You don't have to import the sun or the wind, it's just there. You can see how these things begin to build on one another. Again, it was not that they had the intelligent design plan in the year 2000. It was just sort of all these things that came together. The result is today, China has generating capacity that is more than double that of the United States. Their renewable generation capacity alone is as big as the entire generation capacity of the United States. Electricity as a whole is now about 30% of China's total energy consumption. It's going up like this, it's rising very rapidly. Everyone else is increasing their electricity consumption very, very marginally. Now you see it in things like AI. What is one of the big constraints on AI development? At scale, it is essentially the power that you need to power these data centers. Who is best placed in the world to do this at home? China. They have also concluded that AI aside, having cheap abundant electricity is really central to all of the major growth industries of the 21st century. They are now determined, I think, on a strategic basis to have an electricity system that just produces as much power as humanly possible from whatever fuel source you can find. They want to interconnect this via grid as efficiently as you can, so they're leaders in ultra high voltage distribution technology. They will be able to keep our electricity prices so low that it will be very difficult for anyone anywhere else in the world to compete with their manufacturing, with their AI, with their whatever, anything that electricity goes into. They will have this competitive advantage. I think they're basically right about that. rld to compete with their manufacturing, with their AI, with their whatever, anything that electricity goes into. They will have this competitive advantage. I think they're basically right about that. The point here is that if you're able to get a few of these sort of enabling all-purpose technology decisions right earlier and then scale them up, then a lot of good things can happen as a result of that, regardless of how effective you are at picking winners sector by sector in industrial policy.…

Stored transcript either side of the excerpt. The highlighted words are the published quote; the surrounding text is unedited source, never generated.