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♪ ♪

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♪ ♪

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KAISER KUO:
Is China becoming
the world leader in technology?

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KELLY SIMS GALLAGHER:
The United States and China

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are locked
in a big power struggle.

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Innovation creates global power.

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KUO:
Over the last 40 years,

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China has had
an unprecedented economic boom.

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SILVIA LINDTNER:
To understand how China
innovates is to rethink

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00:00:28,266 --> 00:00:30,066
what innovation means
in the first place.

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(man giving order in Chinese)

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KUO:
They became the manufacturer
of the world--

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tinkering, innovating,

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and even stealing the lead
in some areas.

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PAUL SCANLAN:
Why was China successful
with 5G?

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It got the message
of what could 5G do,

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from healthcare,
education, manufacturing.

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(speaking Mandarin):

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KUO:
With support
from the Chinese state,

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huge corporations like Huawei
have spread their wings.

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JAMES MULVENON:
It was their successes,

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particularly in 5G technology,

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that are
really leading the way

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and are causing us to have
to play catch-up to them.

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KUO:
Today, a tech war

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between China and the West
is starting to heat up.

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♪ ♪

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What does it mean for China

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and the rest of the world?

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"Inside China's Tech Boom,"

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right now, on "NOVA."

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♪ ♪

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♪ ♪

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KUO:
This is the big annual meeting

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for the builders
of the global internet.

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Tech companies
from all over the world

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have come here,
to Barcelona, Spain.

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And the biggest delegation

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is from the Chinese tech company
Huawei.

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Everybody in the world
is talking about 5G.

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KUO:
In this room,

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it feels like Huawei is top dog.

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They have the biggest pavilion
and the most sales and patents

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in the next-generation
internet tech called 5G.

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They're also just
one of many Chinese tech giants

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taking over global industries:

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solar power,

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wind power, drones,

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00:02:27,733 --> 00:02:29,466
batteries--

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all fields
where Chinese companies

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have taken the lead
in innovation.

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How is China doing it?

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By copying others,

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or are they finding their own
innovation secret sauce?

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Could they even surpass the U.S.

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as the world's
leading innovator?

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♪ ♪

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("The Internationale" playing
with Chinese lyrics)

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These are questions
that I've discussed

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time and time again.

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Welcome to the "Sinica Podcast,"

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00:03:02,200 --> 00:03:03,866
a weekly discussion
of current affairs in China.

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(voiceover):
I'm Kaiser Kuo,

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a journalist and podcaster.

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I live in the States,
but for 20 years,

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I lived in China.

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I was comms director at
one of their biggest tech firms

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and guitarist in
China's first heavy metal band,

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Tang Dynasty.

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("The Internationale" continues)

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(holding final note)

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(song fades)

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Oh! Hi.
Hey, how are you?
Good to see you.

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Welcome, yeah.
It's been a while.

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Good to see you.
Yeah, I'm looking forward
to this.

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KUO: When I interview people
for my podcast,

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00:03:40,766 --> 00:03:43,000
I find no shortage of different
takes

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on the rise of Chinese tech.

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The entire Chinese tech
landscape

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and business landscape,

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I think that's actually
getting stronger

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year on year.

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A major misunderstanding

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that Americans might have
about China

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is that it is mostly focused
on lower-value work

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as well as copying.

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But China has
mostly transcended that.

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PAUL TRIOLO:
China is really the only

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peer competitor of the U.S.

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that has companies competing

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across the technology sector.

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China is beating
the United States

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in tech-heavy industries.

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It accounts for a third of
global output

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in knowledge-intensive
industries,

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compared with the United States,
which accounts for 20%.

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KUO:
Today, it might be surprising

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to think of China
as a technology leader.

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But for much of history,
China was the world leader

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in science and innovation.

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In fact, the shame
of losing this position

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and the dream
of regaining it

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were major motivations

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for the founders of
the Chinese Communist Party.

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It all started with
a widespread national awakening.

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REPORTER:
3,000 students gather
in front of Tiananmen

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on 4 May, shouting, "China
is for the Chinese people."

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So to many Chinese,

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they saw science and technology

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as a way of national
rejuvenation

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and national salvation.

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And it became
a foundational principle

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of the modern Chinese state.

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KUO:
Advancing science and technology

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truly became a national
obsession in 1978,

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with the rise of the then
Chinese leader, Deng Xiaoping.

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♪ ♪

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REPORTER:
A new beginning
in U.S.-China relations.

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00:05:27,800 --> 00:05:30,533
KUO:
Deng opened China to the world

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so it could learn
foreign technology.

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His market reforms
helped lift

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over 700 million people
out of poverty.

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00:05:38,700 --> 00:05:42,366
That's more than twice
the population of the U.S.

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00:05:42,366 --> 00:05:45,700
But this was only part
of Deng's plan.

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Another goal was to reclaim
China's historical place

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00:05:49,866 --> 00:05:53,800
as world leader in science and
technology within a generation.

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00:05:53,800 --> 00:05:56,466
So, more than
four decades later,

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00:05:56,466 --> 00:06:00,200
how is Deng's plan going?

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00:06:00,200 --> 00:06:02,433
To many Chinese, there is
no better example

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00:06:02,433 --> 00:06:05,966
of success than the tech giant
Huawei.

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00:06:05,966 --> 00:06:08,366
But it's also at the center
of a storm of accusations

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00:06:08,366 --> 00:06:10,666
of intellectual property theft

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00:06:10,666 --> 00:06:13,233
and ties
with the Chinese government.

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00:06:13,233 --> 00:06:14,700
With all the controversy,

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00:06:14,700 --> 00:06:16,700
it's really easy
to overlook something.

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00:06:16,700 --> 00:06:19,733
This company does innovate,

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00:06:19,733 --> 00:06:21,766
and it does it
in a very different way

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than we do in the West.

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WANG WENJUN (speaking Mandarin):

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♪ ♪

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KUO:
The first thing you notice

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00:06:34,433 --> 00:06:37,533
when stepping onto a Huawei
campus is its style:

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00:06:37,533 --> 00:06:40,566
Renaissance architecture,

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00:06:40,566 --> 00:06:43,633
marble statues,
European luxury.

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00:06:43,633 --> 00:06:47,166
It's all unmistakably Huawei.

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00:06:47,166 --> 00:06:48,966
But despite the Disney vibes,

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00:06:48,966 --> 00:06:50,400
it's the perfect place
to start exploring

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00:06:50,400 --> 00:06:54,000
how Chinese tech companies
innovate.

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00:06:54,000 --> 00:06:56,166
So, this is our library.

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00:06:56,166 --> 00:06:59,666
KUO:
Paul Scanlan is Huawei's
chief technology officer.

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00:06:59,666 --> 00:07:02,900
He was drawn to China
from abroad to work in tech

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00:07:02,900 --> 00:07:04,433
in part because
he was impressed

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00:07:04,433 --> 00:07:09,366
by Huawei's massive investment
in research and development.

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00:07:10,466 --> 00:07:12,966
SCANLAN:
Why I love the company,
it's very simple.

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00:07:12,966 --> 00:07:14,500
It's a platform

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00:07:14,500 --> 00:07:18,400
that allows me to take
a lot of the ideas I have

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to the world.

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00:07:20,500 --> 00:07:23,666
The platform is
an R&D platform.

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We spend more than 22%
of our gross revenue on R&D.

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00:07:29,500 --> 00:07:30,800
KUO:
That makes Huawei

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00:07:30,800 --> 00:07:34,266
one of the world's largest
corporate spenders

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00:07:34,266 --> 00:07:36,133
on research and development.

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00:07:36,133 --> 00:07:38,166
They've set more
technical standards

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00:07:38,166 --> 00:07:43,066
than any other organization
in the world for 5G.

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00:07:43,066 --> 00:07:47,400
5G is an advanced wireless
communication technology.

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00:07:47,400 --> 00:07:50,166
Because it operates at
higher frequencies than 4G,

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00:07:50,166 --> 00:07:53,533
it can be up to
100 times faster

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00:07:53,533 --> 00:07:56,100
and also more reliable.

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00:07:56,100 --> 00:07:59,866
It also hasn't really
been fully deployed yet,

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00:07:59,866 --> 00:08:01,200
but in the small town
of Zhenyuan,

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00:08:01,200 --> 00:08:04,266
we can start to see
what it can do.

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00:08:05,900 --> 00:08:08,300
With 4G,
our cell phone towers

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00:08:08,300 --> 00:08:10,833
connect mainly to our phones,

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00:08:10,833 --> 00:08:12,433
and there is a limit to
how many devices

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00:08:12,433 --> 00:08:16,066
any one tower
can handle at a time.

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00:08:16,066 --> 00:08:18,266
5G is a dramatic improvement

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00:08:18,266 --> 00:08:20,466
that promises to connect
all sorts of devices

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00:08:20,466 --> 00:08:22,566
wirelessly to the internet,

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00:08:22,566 --> 00:08:25,566
and in much greater numbers.

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In wireless communications,

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data is transmitted
by radio waves.

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As you progress from 3G,

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00:08:34,566 --> 00:08:37,933
to 4G,
to 5G,

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00:08:37,933 --> 00:08:42,166
the frequency of the radio waves
becomes higher and higher.

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00:08:42,166 --> 00:08:44,133
This allows more data
to be carried,

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00:08:44,133 --> 00:08:47,266
enabling faster download
and upload speeds.

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00:08:47,266 --> 00:08:48,566
This is a big deal,

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because so much of tech

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depends on internet
infrastructure.

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As 3G progressed to 4G,

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increased data loads
enabled simple phone calls

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00:08:58,133 --> 00:09:00,700
to progress
to ride-hailing apps,

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00:09:00,700 --> 00:09:03,366
food delivery apps,
video conferences--

194
00:09:03,366 --> 00:09:05,566
the list is endless.

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00:09:05,566 --> 00:09:08,600
Increased data loads
help build

196
00:09:08,600 --> 00:09:11,166
the so-called
internet of things,

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00:09:11,166 --> 00:09:13,100
allowing devices
to talk to devices,

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00:09:13,100 --> 00:09:16,700
like cars talking to cars,

199
00:09:16,700 --> 00:09:18,366
or machines in a factory

200
00:09:18,366 --> 00:09:20,400
coordinating to become
fully automated.

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00:09:23,133 --> 00:09:25,633
SCANLAN:
Why was China successful
with 5G?

202
00:09:25,633 --> 00:09:28,333
It got the message
of what could 5G do.

203
00:09:28,333 --> 00:09:32,400
It got the message that,
if I can provide connectivity,

204
00:09:32,400 --> 00:09:34,666
I can collect data--
information.

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00:09:34,666 --> 00:09:37,300
 
Based on information,
A.I. algorithms can do things,

206
00:09:37,300 --> 00:09:39,266
from healthcare, education,

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00:09:39,266 --> 00:09:41,600
manufacturing, okay?
Across all of the sectors.

208
00:09:41,600 --> 00:09:43,933
It understood that urgently.

209
00:09:43,933 --> 00:09:47,400
Huawei is a genuinely
impressive, state-of-the-art,

210
00:09:47,400 --> 00:09:50,200
world-class telecoms equipment
manufacturing company.

211
00:09:50,200 --> 00:09:53,900
 
And it was their successes,
particularly in 5G technology,

212
00:09:53,900 --> 00:09:55,833
that are really leading the way

213
00:09:55,833 --> 00:09:58,433
and are causing us to have to
play catch-up to them.

214
00:09:58,433 --> 00:10:01,200
♪ ♪

215
00:10:01,200 --> 00:10:03,766
WENQI FANG (speaking Mandarin):

216
00:10:03,766 --> 00:10:05,266
LIPING WEI:

217
00:10:05,800 --> 00:10:08,100
♪ ♪

218
00:10:08,100 --> 00:10:11,633
(translated):
What's being installed right now

219
00:10:11,633 --> 00:10:13,200
is a new 5G antenna.

220
00:10:13,200 --> 00:10:15,800
It supports a very wide range
of frequencies,

221
00:10:15,800 --> 00:10:18,633
 
including our 700-megahertz
frequency.

222
00:10:18,633 --> 00:10:20,166
♪ ♪

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00:10:20,166 --> 00:10:22,100
KUO:
China is deploying 5G

224
00:10:22,100 --> 00:10:25,533
at a scale greater than
any other place in the world.

225
00:10:25,533 --> 00:10:29,100
China's exceptionally good at
developing infrastructure,

226
00:10:29,100 --> 00:10:32,633
whether it's, you know,
5G infrastructure

227
00:10:32,633 --> 00:10:34,533
or electric grid
infrastructure,

228
00:10:34,533 --> 00:10:37,333
or electric vehicle
charging infrastructure.

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00:10:37,333 --> 00:10:40,066
It has this ability to
do good planning

230
00:10:40,066 --> 00:10:44,066
and then also to execute.

231
00:10:44,066 --> 00:10:47,200
KUO:
Authorities in China
are pushing 5G hard,

232
00:10:47,200 --> 00:10:49,366
turning
difficult-to-connect places

233
00:10:49,366 --> 00:10:51,666
like China's mountainous
Guizhou province

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00:10:51,666 --> 00:10:56,000
into laboratories for
Huawei's 5G applications.

235
00:10:56,000 --> 00:10:59,000
(Yang Chengyu speaking Mandarin)

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00:10:59,000 --> 00:11:00,866
(translated):
Out here in the mountains,

237
00:11:00,866 --> 00:11:02,000
the internet has always
been poor.

238
00:11:02,000 --> 00:11:03,800
A little bit of bad weather,

239
00:11:03,800 --> 00:11:05,233
a little bit of wind,

240
00:11:05,233 --> 00:11:06,666
no internet.

241
00:11:06,666 --> 00:11:10,333
It was really hard to get
a signal.

242
00:11:10,333 --> 00:11:14,000
 
In remote places,
forget about it.

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00:11:14,000 --> 00:11:15,866
But it has changed recently.

244
00:11:17,133 --> 00:11:18,500
Now, with 5G,

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00:11:18,500 --> 00:11:20,266
we've started doing
smart farming.

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♪ ♪

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00:11:23,000 --> 00:11:24,600
KUO:
5G technology

248
00:11:24,600 --> 00:11:26,566
is able to make
stronger connections

249
00:11:26,566 --> 00:11:28,066
and transfer more data

250
00:11:28,066 --> 00:11:29,866
to more points.

251
00:11:29,866 --> 00:11:31,366
This enables places
like this tea farm

252
00:11:31,366 --> 00:11:33,733
to deploy wireless sensors

253
00:11:33,733 --> 00:11:37,000
in hard-to-reach places.

254
00:11:37,000 --> 00:11:38,833
(speaking Mandarin)

255
00:11:38,833 --> 00:11:44,300
(translated):
This tea plantation has really
embraced smart farming.

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00:11:44,300 --> 00:11:49,200
It's been quite useful for
our agricultural management.

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These sensors all help us
predict the humidity,

258
00:11:51,500 --> 00:11:53,333
wind conditions,
and temperature.

259
00:11:53,333 --> 00:11:55,100
♪ ♪

260
00:11:55,100 --> 00:11:57,666
KUO:
More data leads to
better modeling

261
00:11:57,666 --> 00:11:59,600
and better crop yields.

262
00:11:59,600 --> 00:12:01,733
Processing the information
fed to it through 5G,

263
00:12:01,733 --> 00:12:05,066
a smart farming system
can alert farmers

264
00:12:05,066 --> 00:12:07,966
to the optimal times
to remove weeds,

265
00:12:07,966 --> 00:12:10,833
plant seeds, and harvest crops.

266
00:12:10,833 --> 00:12:13,933
But this is just
the beginning of what 5G can do.

267
00:12:15,966 --> 00:12:18,700
What I've seen in China

268
00:12:18,700 --> 00:12:22,366
is 5G completely changing
the way people live and work,

269
00:12:22,366 --> 00:12:26,066
even in seemingly low-tech
traditional industries.

270
00:12:26,066 --> 00:12:27,200
Across the country,

271
00:12:27,200 --> 00:12:29,500
more than two-and-a-half million
people

272
00:12:29,500 --> 00:12:32,166
are employed in coal mining.

273
00:12:32,166 --> 00:12:33,966
It's dangerous work,

274
00:12:33,966 --> 00:12:36,633
known for frequent accidents
and fatalities.

275
00:12:36,633 --> 00:12:40,233
(translated):
This is the main shaft
of the mine.

276
00:12:40,233 --> 00:12:42,700
It's a dark place
with thick air.

277
00:12:42,700 --> 00:12:45,600
It's also the most
dangerous place in the mine.

278
00:12:45,600 --> 00:12:47,066
KUO:
One of the problems

279
00:12:47,066 --> 00:12:50,533
is the inability
to control machinery remotely.

280
00:12:50,533 --> 00:12:52,266
It's impractical
to connect using wires,

281
00:12:52,266 --> 00:12:55,866
meaning workers have needed
to be perilously close

282
00:12:55,866 --> 00:12:58,166
to their machines
at all times.

283
00:12:58,166 --> 00:13:02,566
5G is capable of bringing
digital connections

284
00:13:02,566 --> 00:13:04,600
into deep underground crevices,
such as this one,

285
00:13:04,600 --> 00:13:09,566
allowing the facility
to become completely automated.

286
00:13:09,566 --> 00:13:12,233
Previous 4G systems
beamed data inefficiently,

287
00:13:12,233 --> 00:13:14,600
in all directions.

288
00:13:14,600 --> 00:13:18,433
5G is much more precise.

289
00:13:18,433 --> 00:13:22,833
We can make beams simultaneously

290
00:13:22,833 --> 00:13:25,300
that can be a little sliver
going this way,

291
00:13:25,300 --> 00:13:27,800
or we can have a
little sliver that way,

292
00:13:27,800 --> 00:13:29,200
or we can have
multiple ones that way,

293
00:13:29,200 --> 00:13:30,266
or multiple ones this way.

294
00:13:30,266 --> 00:13:32,700
And it can extend the distance,

295
00:13:32,700 --> 00:13:34,533
or it can provide more capacity,

296
00:13:34,533 --> 00:13:38,633
or it can follow
somebody or something.

297
00:13:38,633 --> 00:13:41,500
KUO:
China says its goal
is to ultimately

298
00:13:41,500 --> 00:13:44,666
move away from coal and
into cleaner forms of energy.

299
00:13:45,933 --> 00:13:51,000
5G is a critical part of
this plan, as well.

300
00:13:51,000 --> 00:13:54,100
This is the Dingzhuang
floating solar farm.

301
00:13:54,100 --> 00:13:57,433
Across a large swath of sea
are endless solar panels,

302
00:13:57,433 --> 00:14:00,166
each requiring monitoring.

303
00:14:00,166 --> 00:14:02,266
The plant's
expected total output

304
00:14:02,266 --> 00:14:06,133
is 550 million
kilowatt-hours per year.

305
00:14:06,133 --> 00:14:10,733
That's enough to power
52,000 typical American homes.

306
00:14:10,733 --> 00:14:15,066
SCANLAN:
You have tens of thousands
of photovoltaic cells,

307
00:14:15,066 --> 00:14:17,700
and 5G can monitor information
from them

308
00:14:17,700 --> 00:14:20,000
more efficiently
than anything else can.

309
00:14:20,000 --> 00:14:21,733
(alarm blaring)

310
00:14:21,733 --> 00:14:24,200
KUO:
China's national
5G infrastructure

311
00:14:24,200 --> 00:14:29,400
gives a built-in advantage
to this large-scale solar farm.

312
00:14:29,400 --> 00:14:32,333
Solar panel technology is
prone to malfunctions,

313
00:14:32,333 --> 00:14:34,366
and one problematic panel

314
00:14:34,366 --> 00:14:37,800
can shut down an entire grid.

315
00:14:37,800 --> 00:14:41,533
5G enables each panel
to constantly send data

316
00:14:41,533 --> 00:14:43,100
to a central command station,

317
00:14:43,100 --> 00:14:44,866
making inspections
more efficient

318
00:14:44,866 --> 00:14:47,066
and saving labor costs.

319
00:14:47,066 --> 00:14:50,033
♪ ♪

320
00:14:50,033 --> 00:14:52,800
And a solar farm can scale
to a size

321
00:14:52,800 --> 00:14:55,566
that wouldn't be possible
otherwise.

322
00:14:55,566 --> 00:14:57,666
I can now monitor them

323
00:14:57,666 --> 00:14:59,900
to see whether they're failing

324
00:14:59,900 --> 00:15:02,833
or when they're going to fail,
so I can optimize

325
00:15:02,833 --> 00:15:05,933
that prediction of maintenance
for these farms.

326
00:15:05,933 --> 00:15:09,900
KUO:
And there's another
unexpected benefit here.

327
00:15:09,900 --> 00:15:11,166
The shade from the solar farm

328
00:15:11,166 --> 00:15:13,500
actually cools
the surrounding water,

329
00:15:13,500 --> 00:15:15,166
helping create
an ideal environment

330
00:15:15,166 --> 00:15:17,966
for farming shrimp
and other seafood.

331
00:15:17,966 --> 00:15:21,133
But all of this is possible
because the Chinese government

332
00:15:21,133 --> 00:15:23,900
sees the advantage of
creating a web of connectivity

333
00:15:23,900 --> 00:15:25,733
across the entire country,

334
00:15:25,733 --> 00:15:28,400
and is willing to use
its central authority

335
00:15:28,400 --> 00:15:30,333
to make it a reality.

336
00:15:30,333 --> 00:15:32,866
5G cellular technology

337
00:15:32,866 --> 00:15:35,100
is really sort of a major leap.

338
00:15:35,100 --> 00:15:37,533
And it really is more of
the high-tech future

339
00:15:37,533 --> 00:15:40,100
that we've seen
in the movies and in sci-fi

340
00:15:40,100 --> 00:15:43,100
in which we're surrounded
all the time

341
00:15:43,100 --> 00:15:45,833
by, you know,
really high-speed data

342
00:15:45,833 --> 00:15:47,800
and the ability
to exploit all of that.

343
00:15:47,800 --> 00:15:49,800
And that just basically means

344
00:15:49,800 --> 00:15:51,433
5G will enable

345
00:15:51,433 --> 00:15:54,966
much more precision-based
applications.

346
00:15:56,200 --> 00:15:59,366
KUO:
Driverless cars,
automated ports and factories,

347
00:15:59,366 --> 00:16:02,300
next-generation A.I.

348
00:16:02,300 --> 00:16:05,000
What all of these things
have in common is

349
00:16:05,000 --> 00:16:06,766
that they can't fully develop

350
00:16:06,766 --> 00:16:10,100
until 5G infrastructure
is built.

351
00:16:10,100 --> 00:16:11,933
And, as with most
new infrastructure,

352
00:16:11,933 --> 00:16:15,500
we don't yet know
how it will change society,

353
00:16:15,500 --> 00:16:17,766
for better or worse.

354
00:16:17,766 --> 00:16:22,000
(people talking in background,
robot whirring)

355
00:16:22,000 --> 00:16:25,266
KUO:
Why is it that a Chinese company

356
00:16:25,266 --> 00:16:26,666
is leading the way
in building

357
00:16:26,666 --> 00:16:28,100
the next generation
of the internet?

358
00:16:28,100 --> 00:16:29,833
♪ ♪

359
00:16:29,833 --> 00:16:31,300
There's no doubt

360
00:16:31,300 --> 00:16:34,500
that the Chinese Communist Party
uses its central authority

361
00:16:34,500 --> 00:16:37,200
to force change in ways
that aren't possible

362
00:16:37,200 --> 00:16:38,700
in Western democracies.

363
00:16:38,700 --> 00:16:40,900
But another key reason

364
00:16:40,900 --> 00:16:44,033
is the intense work culture.

365
00:16:44,033 --> 00:16:45,666
It can be brutal,

366
00:16:45,666 --> 00:16:47,800
with six-day weeks
and 12-hour days

367
00:16:47,800 --> 00:16:49,466
being the norm.

368
00:16:49,466 --> 00:16:50,466
Despite it all,

369
00:16:50,466 --> 00:16:52,366
when I worked in Chinese tech,

370
00:16:52,366 --> 00:16:55,233
I still found something
energizing about it.

371
00:16:55,233 --> 00:16:57,033
(speaking Mandarin)

372
00:16:57,033 --> 00:17:03,733
(phone alarm ringing,
phone vibrating)

373
00:17:03,733 --> 00:17:06,133
KUO:
Junior associates
Niu Yehan and Long Yin

374
00:17:06,133 --> 00:17:08,000
are currently taking part

375
00:17:08,000 --> 00:17:10,966
in Huawei's brand of
basic training.

376
00:17:10,966 --> 00:17:14,433
Here, all new employees,
even office workers,

377
00:17:14,433 --> 00:17:17,966
must learn the art of
deploying 5G base stations.

378
00:17:17,966 --> 00:17:19,900
NIU (speaking Mandarin):

379
00:17:19,900 --> 00:17:21,866
(speaking Mandarin)

380
00:17:21,866 --> 00:17:25,233
KUO:
They train for a variety of
terrain, from urban centers

381
00:17:25,233 --> 00:17:27,600
to the kind of remote mountains

382
00:17:27,600 --> 00:17:29,533
that Guizhou province
is known for

383
00:17:29,533 --> 00:17:32,000
and that Huawei
specializes in reaching.

384
00:17:32,000 --> 00:17:33,900
WANG WENJUN
(speaking Mandarin):

385
00:17:46,500 --> 00:17:50,966
NIU (speaking Mandarin):

386
00:17:51,666 --> 00:17:55,066
LONG:

387
00:17:58,633 --> 00:17:59,666
(both laugh)

388
00:18:00,700 --> 00:18:02,366
(murmurs in Mandarin)

389
00:18:03,566 --> 00:18:04,700
MAN (speaking Mandarin):

390
00:18:08,766 --> 00:18:12,900
 
KUO:
The training we saw is
hard to describe.

391
00:18:12,900 --> 00:18:14,333
Western observers

392
00:18:14,333 --> 00:18:19,033
often call the Huawei
company culture militaristic.

393
00:18:19,033 --> 00:18:21,633
That's probably
part of the story.

394
00:18:21,633 --> 00:18:23,400
But there's also something else.

395
00:18:23,400 --> 00:18:25,933
Huawei tries
to motivate its employees

396
00:18:25,933 --> 00:18:28,500
in ways that probably
would not fly

397
00:18:28,500 --> 00:18:31,066
in Western industry.

398
00:18:31,066 --> 00:18:35,100
Wang Wenjun leads the training
for new recruits.

399
00:18:36,733 --> 00:18:41,100
(translated):
This is our training area.

400
00:18:41,100 --> 00:18:43,700
I think it's different
than the training facilities

401
00:18:43,700 --> 00:18:47,533
in most other companies.

402
00:18:47,533 --> 00:18:51,033
Our facilities are outdoors,
on top of a mountain.

403
00:18:51,033 --> 00:18:55,566
♪ ♪

404
00:18:55,566 --> 00:18:57,700
This slogan...

405
00:18:57,700 --> 00:19:01,133
Uh, how would I translate it
for foreigners?

406
00:19:01,133 --> 00:19:03,666
"If you want to take more
responsibilities,

407
00:19:03,666 --> 00:19:08,166
 
you must work harder
in the training."

408
00:19:08,166 --> 00:19:11,033
KUO:
I look at these slogans

409
00:19:11,033 --> 00:19:13,366
and think about how
out of place they would seem

410
00:19:13,366 --> 00:19:14,600
at a Western company.

411
00:19:14,600 --> 00:19:18,800
The messages are about
enduring hardships

412
00:19:18,800 --> 00:19:22,466
and winning battles.

413
00:19:22,466 --> 00:19:24,633
Huawei was
founded by Ren Zhengfei,

414
00:19:24,633 --> 00:19:27,833
who started his career
in the Chinese army.

415
00:19:27,833 --> 00:19:30,200
He then went on to found Huawei,

416
00:19:30,200 --> 00:19:34,300
whose name literally means
"Chinese achievement."

417
00:19:34,300 --> 00:19:37,066
♪ ♪

418
00:19:37,066 --> 00:19:40,233
What I find interesting is
how the posters around campus

419
00:19:40,233 --> 00:19:42,766
echo the propaganda style

420
00:19:42,766 --> 00:19:44,600
of the Chinese government.

421
00:19:44,600 --> 00:19:47,333
They talk about the
importance of sacrifice

422
00:19:47,333 --> 00:19:52,133
and hard work in aiding China's
technological development.

423
00:19:52,133 --> 00:19:54,433
A lot of what Beijing
tries to do is

424
00:19:54,433 --> 00:19:56,633
that it's trying to use ideology

425
00:19:56,633 --> 00:20:00,666
 
to corral a lot of the
dynamic firms-- and people--

426
00:20:00,666 --> 00:20:02,933
in China to pursue the goals

427
00:20:02,933 --> 00:20:04,866
that it really wants to have.

428
00:20:04,866 --> 00:20:07,066
(Wang Wenjun speaking Mandarin)

429
00:20:07,066 --> 00:20:10,600
(translated):
My job is to train
the young people

430
00:20:10,600 --> 00:20:13,200
to develop the spirit
of bitter struggle,

431
00:20:13,200 --> 00:20:16,433
to train everyone
to become full with vigor.

432
00:20:16,433 --> 00:20:18,633
Only when you have suffered

433
00:20:18,633 --> 00:20:21,466
can you understand
the sweet things in life.

434
00:20:21,466 --> 00:20:23,533
People live good lives now.

435
00:20:23,533 --> 00:20:25,066
They never have experienced
the struggle.

436
00:20:25,066 --> 00:20:28,800
The point of this place
is to give them a taste of that.

437
00:20:32,166 --> 00:20:35,500
XINYAN YU
(speaking Mandarin):

438
00:20:39,066 --> 00:20:43,400
NIU:

439
00:20:43,400 --> 00:20:48,366
YU:

440
00:20:48,366 --> 00:20:51,300
MAN:

441
00:20:54,633 --> 00:20:59,100
KUO:
The people here train
to connect not just China,

442
00:20:59,100 --> 00:21:01,900
but every corner of the world.

443
00:21:01,900 --> 00:21:04,400
This is in line
with Chinese state goals,

444
00:21:04,400 --> 00:21:07,433
which seek to export
Chinese technology globally.

445
00:21:07,433 --> 00:21:10,800
GALLAGHER:
In countries in Africa,

446
00:21:10,800 --> 00:21:12,866
you will mostly see

447
00:21:12,866 --> 00:21:14,333
Chinese equipment everywhere.

448
00:21:14,333 --> 00:21:17,533
I was recently in Ethiopia,

449
00:21:17,533 --> 00:21:19,233
and I was struck,

450
00:21:19,233 --> 00:21:20,800
because I kept having
this out-of-body experience.

451
00:21:20,800 --> 00:21:23,633
I felt like I was in China.

452
00:21:23,633 --> 00:21:25,266
The subway
was constructed by China.

453
00:21:25,266 --> 00:21:28,800
The subway cars
have Chinese words in them.

454
00:21:28,800 --> 00:21:32,600
The United States is
not visibly present

455
00:21:32,600 --> 00:21:35,433
in a lot of developing
countries around the world.

456
00:21:35,433 --> 00:21:37,000
KUO:
By 2017,

457
00:21:37,000 --> 00:21:39,533
Huawei was bringing 5G
and its applications

458
00:21:39,533 --> 00:21:42,566
to the entire world,

459
00:21:42,566 --> 00:21:45,833
and then the U.S. government
started to take notice.

460
00:21:45,833 --> 00:21:47,566
♪ ♪

461
00:21:47,566 --> 00:21:50,966
CHUCK SCHUMER:
Huawei and ZTE are both
state-backed companies.

462
00:21:50,966 --> 00:21:53,333
Their efforts to enter
the American market

463
00:21:53,333 --> 00:21:54,833
is a great example

464
00:21:54,833 --> 00:21:58,166
of how China attempts
to steal our private data

465
00:21:58,166 --> 00:22:00,166
and intellectual property.

466
00:22:00,166 --> 00:22:03,766
KUO:
In 2018, Huawei CFO
Meng Wanzhou,

467
00:22:03,766 --> 00:22:05,700
the daughter of founder
Ren Zhengfei,

468
00:22:05,700 --> 00:22:07,766
was apprehended in Canada

469
00:22:07,766 --> 00:22:10,733
under suspicion
of violating U.S. sanctions.

470
00:22:10,733 --> 00:22:14,400
(Hua Chunying speaking Mandarin)

471
00:22:14,400 --> 00:22:16,433
(translated):
The whole world sees this
for what it is.

472
00:22:16,433 --> 00:22:21,033
America is trying to strangle
China's high-tech companies.

473
00:22:21,033 --> 00:22:23,066
KUO:
In May 2019,

474
00:22:23,066 --> 00:22:24,866
the U.S. government
placed Huawei

475
00:22:24,866 --> 00:22:29,066
on the so-called Entity List,
a register of companies

476
00:22:29,066 --> 00:22:32,900
that are effectively banned
from doing business in the U.S.

477
00:22:32,900 --> 00:22:35,233
James Mulvenon
is one of the architects

478
00:22:35,233 --> 00:22:36,933
of this policy change.

479
00:22:36,933 --> 00:22:39,200
MULVENON:
The day that Huawei
and its subsidiaries

480
00:22:39,200 --> 00:22:41,700
were placed on the Entity List
was frankly

481
00:22:41,700 --> 00:22:45,266
a day of real sense of
personal accomplishment for me.

482
00:22:45,266 --> 00:22:47,533
I had been writing about Huawei
for 25 years

483
00:22:47,533 --> 00:22:49,466
and informing
the U.S. government

484
00:22:49,466 --> 00:22:52,133
about many different features
of Huawei's relationship

485
00:22:52,133 --> 00:22:54,766
with the Chinese military,
with the Chinese government,

486
00:22:54,766 --> 00:22:56,333
its activities abroad

487
00:22:56,333 --> 00:22:59,333
that I thought were
suspicious and questionable.

488
00:22:59,333 --> 00:23:01,300
A country is always going
to be extremely protective

489
00:23:01,300 --> 00:23:03,166
of its telecommunications
infrastructure.

490
00:23:03,166 --> 00:23:07,000
It is the way it maintains
control over its territory

491
00:23:07,000 --> 00:23:11,100
and connects its leaders,
its police forces, its military,

492
00:23:11,100 --> 00:23:12,966
and, during the Cold War,

493
00:23:12,966 --> 00:23:15,733
was the way in which
the United States government

494
00:23:15,733 --> 00:23:18,200
maintained command and control
over weapons that could have

495
00:23:18,200 --> 00:23:20,066
destroyed the world
hundreds of times over.

496
00:23:21,666 --> 00:23:24,133
KUO:
Mulvenon contends that while
there hasn't been any proof--

497
00:23:24,133 --> 00:23:27,666
nothing in public, at least--
of Huawei's spying in the U.S.,

498
00:23:27,666 --> 00:23:30,033
there is no way of ensuring
a Chinese company's

499
00:23:30,033 --> 00:23:32,533
independence from Beijing.

500
00:23:32,533 --> 00:23:34,400
To protect against this threat,

501
00:23:34,400 --> 00:23:36,466
the U.S. government
has mandated

502
00:23:36,466 --> 00:23:38,900
Huawei equipment
across the country

503
00:23:38,900 --> 00:23:43,633
be ripped out and replaced.

504
00:23:43,633 --> 00:23:45,966
In the town of
South Canaan, Pennsylvania,

505
00:23:45,966 --> 00:23:48,933
local telecom company
C.E.O. Jim Kail

506
00:23:48,933 --> 00:23:51,600
is overseeing the removal
of Huawei equipment

507
00:23:51,600 --> 00:23:54,166
from the internet
infrastructure.

508
00:23:54,166 --> 00:23:55,533
But now,

509
00:23:55,533 --> 00:23:58,033
he faces a new problem:

510
00:23:58,033 --> 00:24:00,400
alternate equipment
is three times more expensive

511
00:24:00,400 --> 00:24:01,666
than Huawei's.

512
00:24:01,666 --> 00:24:03,033
Without Huawei,

513
00:24:03,033 --> 00:24:05,066
there is no cost-effective way

514
00:24:05,066 --> 00:24:08,200
to connect this region
to the internet.

515
00:24:08,200 --> 00:24:09,800
KAIL:
Our allegiance is to
our own country here,

516
00:24:09,800 --> 00:24:11,966
and that's very important.

517
00:24:11,966 --> 00:24:13,933
I take that very seriously.

518
00:24:13,933 --> 00:24:15,566
And I'm, the rest of us,
as rural Americans,

519
00:24:15,566 --> 00:24:17,200
we're patriotic.

520
00:24:17,200 --> 00:24:20,733
And yeah, so we, we did think
long and hard about that

521
00:24:20,733 --> 00:24:22,866
before we made that decision.

522
00:24:22,866 --> 00:24:25,466
 
Had about 1,300 of these units
deployed in customers' homes.

523
00:24:25,466 --> 00:24:26,733
You know, over the course

524
00:24:26,733 --> 00:24:29,300
of the last couple of years,
in particular,

525
00:24:29,300 --> 00:24:32,700
there was the, the push
to, to ban the product, and...

526
00:24:32,700 --> 00:24:34,733
Which eventually
led to the mandate

527
00:24:34,733 --> 00:24:36,466
where we had to rip
and replace.

528
00:24:36,466 --> 00:24:38,566
And we're now in
the process of doing that.

529
00:24:38,566 --> 00:24:40,066
We're taking, swapping out

530
00:24:40,066 --> 00:24:41,933
the Huawei solution with a,
with a different solution.

531
00:24:41,933 --> 00:24:44,666
And actually, that,
when you think about it,

532
00:24:44,666 --> 00:24:47,300
it's actually a windfall
for China, right?

533
00:24:47,300 --> 00:24:49,133
So, you're actually
taking equipment out there,

534
00:24:49,133 --> 00:24:50,433
you're ripping it out,
and you're going out

535
00:24:50,433 --> 00:24:53,033
and buying new equipment, right?

536
00:24:53,033 --> 00:24:54,400
Buying it from China, right?

537
00:24:54,400 --> 00:24:55,500
I mean, you know, it's,
it's the vendors,

538
00:24:55,500 --> 00:24:56,800
the vendors
we do business with,

539
00:24:56,800 --> 00:24:58,433
theyey're getting their parts
from China,

540
00:24:58,433 --> 00:25:01,400
and so China is getting
a windfall out of this.

541
00:25:01,400 --> 00:25:03,533
KUO: For many observers
in America,

542
00:25:03,533 --> 00:25:05,533
the most challenging
thing about Huawei

543
00:25:05,533 --> 00:25:07,166
is that they can make products

544
00:25:07,166 --> 00:25:08,500
that no Western firm

545
00:25:08,500 --> 00:25:09,700
has been able to replicate,

546
00:25:09,700 --> 00:25:11,733
especially when it comes
to cost.

547
00:25:12,933 --> 00:25:15,233
And, without Huawei,
there is simply

548
00:25:15,233 --> 00:25:17,566
no cost-effective way
right now

549
00:25:17,566 --> 00:25:20,100
to build 5G
across much of America.

550
00:25:20,100 --> 00:25:21,966
Something that lawyer
Eric Atria discovered

551
00:25:21,966 --> 00:25:27,466
when he and his family
moved to rural Florida.

552
00:25:27,466 --> 00:25:29,800
We moved out here
and found out

553
00:25:29,800 --> 00:25:31,900
that there literally wasn't
internet out here.

554
00:25:31,900 --> 00:25:33,466
We couldn't get any internet.

555
00:25:33,466 --> 00:25:35,266
And the only place in our yard

556
00:25:35,266 --> 00:25:36,800
that we could actually get
one bar of service

557
00:25:36,800 --> 00:25:39,866
fr our cell phone provider
is this log.

558
00:25:39,866 --> 00:25:41,666
So, my wife called it
"logging on."

559
00:25:41,666 --> 00:25:45,800
And you only get one
bar of signal standing here.

560
00:25:45,800 --> 00:25:47,866
So, my wife was out here
the other day,

561
00:25:47,866 --> 00:25:50,033
holding her phone in the air
as a personal hotspot

562
00:25:50,033 --> 00:25:51,366
and her laptop
in the other hand,

563
00:25:51,366 --> 00:25:53,033
so she could
do a work meeting.

564
00:25:55,333 --> 00:25:57,033
♪ ♪

565
00:25:57,033 --> 00:25:58,866
Actually not working!

566
00:25:58,866 --> 00:26:00,200
KUO:
The United States

567
00:26:00,200 --> 00:26:03,166
has only built about
100,000 5G base stations,

568
00:26:03,166 --> 00:26:07,600
compared to the
over two million in China.

569
00:26:07,600 --> 00:26:10,833
CHILD:
Now it's working.

570
00:26:10,833 --> 00:26:13,900
KUO:
Why is China so much more
successful at creating

571
00:26:13,900 --> 00:26:16,066
affordable
cutting-edge tech?

572
00:26:16,066 --> 00:26:19,433
SEOW:
So, historically,
a country's capacity to produce

573
00:26:19,433 --> 00:26:22,100
was itself viewed as innovative.

574
00:26:22,100 --> 00:26:25,066
So, in imperial times,
China's capacity

575
00:26:25,066 --> 00:26:28,066
to produce these, you know,
wonderful goods, this porcelain,

576
00:26:28,066 --> 00:26:31,266
this silk,
was awe-inspiring for those

577
00:26:31,266 --> 00:26:34,166
who were able to, to view them,
to see them.

578
00:26:34,166 --> 00:26:37,066
And it's only closer
to our present

579
00:26:37,066 --> 00:26:38,800
where we see this distinction

580
00:26:38,800 --> 00:26:41,433
between innovation
and production.

581
00:26:41,433 --> 00:26:44,600
DAN WANG:
China is a place where
R&D and manufacturing

582
00:26:44,600 --> 00:26:47,233
are very
tightly linked together,

583
00:26:47,233 --> 00:26:50,933
where the knowledge can really
circulate and be kept alive,

584
00:26:50,933 --> 00:26:53,066
it can be practiced,
it can be made better.

585
00:26:53,066 --> 00:26:55,433
And that is something
where the U.S. has fallen behind

586
00:26:55,433 --> 00:26:57,933
pretty substantially
over the last five decades.

587
00:26:59,600 --> 00:27:03,633
KUO:
Shenzhen is the manufacturing
epicenter of China.

588
00:27:03,633 --> 00:27:05,566
It's also the hometown

589
00:27:05,566 --> 00:27:09,233
of most of the Chinese
tech giants, including Huawei.

590
00:27:10,900 --> 00:27:15,200
♪ ♪

591
00:27:15,200 --> 00:27:19,066
So Shenzhen was declared
famously by Deng Xiaoping

592
00:27:19,066 --> 00:27:21,766
 
a special economic zone
in the 1980s.

593
00:27:24,333 --> 00:27:26,333
KUO:
Before 1979,

594
00:27:26,333 --> 00:27:30,966
Shenzhen was a small fishing
village of 30,000 people.

595
00:27:30,966 --> 00:27:33,500
Then it was designated China's
first

596
00:27:33,500 --> 00:27:36,466
special economic zone--
an experiment with capitalism

597
00:27:36,466 --> 00:27:39,733
that set it apart from the
centrally planned economic model

598
00:27:39,733 --> 00:27:41,966
in the rest of the country.

599
00:27:41,966 --> 00:27:43,800
From the beginning,

600
00:27:43,800 --> 00:27:45,900
authorities viewed mastery
of manufacturing

601
00:27:45,900 --> 00:27:49,266
as key to innovation.

602
00:27:49,266 --> 00:27:51,000
Flash-forward to today,

603
00:27:51,000 --> 00:27:54,766
Shenzhen is the manufacturing
powerhouse of the world.

604
00:27:54,766 --> 00:27:56,100
(Gao Jialin speaking Mandarin)

605
00:27:56,100 --> 00:27:58,033
(translated):
In 1997,

606
00:27:58,033 --> 00:28:00,700
there were many
foreign investors here.

607
00:28:00,700 --> 00:28:03,933
 
It was the peak of
the "reform and opening" years.

608
00:28:03,933 --> 00:28:07,466
Lots of foreign capital was
flowing into China,

609
00:28:07,466 --> 00:28:09,500
and this gave us
lots of opportunities

610
00:28:09,500 --> 00:28:12,333
to learn and improve ourselves.

611
00:28:12,333 --> 00:28:14,866
A lot of people from all over
China, from Europe,

612
00:28:14,866 --> 00:28:17,800
from the United States, and from
many other parts of the world

613
00:28:17,800 --> 00:28:20,566
came to Shenzhen

614
00:28:20,566 --> 00:28:23,233
to implement technology
production in new ways.

615
00:28:23,233 --> 00:28:25,433
KUO:
To walk around Shenzhen

616
00:28:25,433 --> 00:28:28,933
is to see a tech hub
which is very different

617
00:28:28,933 --> 00:28:31,900
from Silicon Valley's
software startup culture.

618
00:28:31,900 --> 00:28:33,100
At the center of it all

619
00:28:33,100 --> 00:28:36,700
are the factories
and the art of making.

620
00:28:36,700 --> 00:28:40,400
Makerspaces are everywhere,
where people produce,

621
00:28:40,400 --> 00:28:44,133
tinker, hack, and, most
famously, copy foreign tech.

622
00:28:44,133 --> 00:28:46,533
DAN WANG:
A lot of developing countries
got to be richer

623
00:28:46,533 --> 00:28:49,866
by copying and, indeed, stealing
from advanced countries.

624
00:28:49,866 --> 00:28:51,366
That was the case

625
00:28:51,366 --> 00:28:53,966
when the United States
was a major I.P. violator

626
00:28:53,966 --> 00:28:56,200
back in the 19th century,

627
00:28:56,200 --> 00:28:58,200
mostly from the United Kingdom.

628
00:28:58,200 --> 00:29:01,800
KUO:
Zhang Jiuzhou is a
product designer in Shenzhen.

629
00:29:01,800 --> 00:29:07,733
He challenges the whole idea
of what I.P. theft means.

630
00:29:07,733 --> 00:29:10,400
(speaking Mandarin)

631
00:29:10,400 --> 00:29:11,666
(translated):
A lot of people talk

632
00:29:11,666 --> 00:29:13,633
about knock-off products
in China,

633
00:29:13,633 --> 00:29:16,600
like all the fake iPhones
made here.

634
00:29:16,600 --> 00:29:19,866
 
But I see "knock-off"
as a neutral word,

635
00:29:19,866 --> 00:29:22,566
which means
learning and evolving.

636
00:29:22,566 --> 00:29:25,366
Something that's associated
with intellectual property,

637
00:29:25,366 --> 00:29:29,000
with patents, arguably with a
very Western-centric definition

638
00:29:29,000 --> 00:29:31,700
of what counts as innovation,

639
00:29:31,700 --> 00:29:34,200
which is often rooted in this
idea of,

640
00:29:34,200 --> 00:29:37,466
that there's an authentic,
original,

641
00:29:37,466 --> 00:29:42,633
charismatic technology creator
who came up with this fantastic,

642
00:29:42,633 --> 00:29:44,200
completely novel idea

643
00:29:44,200 --> 00:29:46,766
that's revolutionizing
a whole industry.

644
00:29:46,766 --> 00:29:48,366
And we don't
really think of something

645
00:29:48,366 --> 00:29:51,166
like modification

646
00:29:51,166 --> 00:29:53,866
or slow-paced change as
innovation.

647
00:29:53,866 --> 00:29:55,100
And so what I think
is really important

648
00:29:55,100 --> 00:29:57,133
for us to understand
how China innovates

649
00:29:57,133 --> 00:29:59,766
is to rethink what innovation
means in the first place.

650
00:30:01,000 --> 00:30:03,000
DAN WANG:
There is a more important
part of technology,

651
00:30:03,000 --> 00:30:07,433
which is something I call
process knowledge,

652
00:30:07,433 --> 00:30:10,200
which is simply the experience,
the tacit knowledge,

653
00:30:10,200 --> 00:30:12,100
the understanding
of how to make something.

654
00:30:12,100 --> 00:30:14,066
And so, in the kitchen context,

655
00:30:14,066 --> 00:30:16,766
if you put someone into
a super-fancy kitchen

656
00:30:16,766 --> 00:30:19,400
decked out
with really fancy gadgets,

657
00:30:19,400 --> 00:30:23,033
as well as extremely clear
recipes,

658
00:30:23,033 --> 00:30:24,866
I think that person would have
a hard time

659
00:30:24,866 --> 00:30:26,800
doing something as simple as
frying an egg

660
00:30:26,800 --> 00:30:30,266
if he hasn't had some cooking
experience in the past.

661
00:30:30,266 --> 00:30:33,800
KUO:
The kitchen analogy
seems like a good one to me.

662
00:30:33,800 --> 00:30:35,900
In my years
working in tech in China,

663
00:30:35,900 --> 00:30:39,400
I saw it become
the workshop of the world.

664
00:30:39,400 --> 00:30:41,266
Like a nation of busy chefs,

665
00:30:41,266 --> 00:30:43,466
China was making things
at turbo speed,

666
00:30:43,466 --> 00:30:44,933
building world-class skills.

667
00:30:44,933 --> 00:30:48,633
But then something else
started to happen.

668
00:30:48,633 --> 00:30:51,766
They started
experimenting in the kitchen.

669
00:30:51,766 --> 00:30:54,700
As there was increasing
clustering

670
00:30:54,700 --> 00:30:58,900
of manufacturing centers
around different industries,

671
00:30:58,900 --> 00:31:00,466
a lot of learning occurred.

672
00:31:00,466 --> 00:31:02,200
I remember going through
a factory

673
00:31:02,200 --> 00:31:06,200
in China, and one of the ways
they had been able to cut

674
00:31:06,200 --> 00:31:09,400
the cost of the solar panel
was to figure out a way

675
00:31:09,400 --> 00:31:12,366
to slice the ingot more thinly.

676
00:31:12,366 --> 00:31:18,866
China is masterful at these
types of process innovations,

677
00:31:18,866 --> 00:31:20,333
and, over time, also began

678
00:31:20,333 --> 00:31:24,833
to really gain
innovation capabilities.

679
00:31:24,833 --> 00:31:26,600
KUO:
The spaces where China
has world-leading tech

680
00:31:26,600 --> 00:31:28,100
tend to be the places

681
00:31:28,100 --> 00:31:31,966
where China holds
manufacturing dominance.

682
00:31:31,966 --> 00:31:34,200
Chinese battery companies
make 77%

683
00:31:34,200 --> 00:31:36,066
of the world's batteries.

684
00:31:36,066 --> 00:31:38,666
China's firms produce 80%

685
00:31:38,666 --> 00:31:41,000
of the components
in solar panels.

686
00:31:41,000 --> 00:31:42,933
Huawei followed a similar path.

687
00:31:42,933 --> 00:31:45,066
After producing
telecom equipment

688
00:31:45,066 --> 00:31:47,833
for foreign companies for years,

689
00:31:47,833 --> 00:31:50,300
their manufacturing experience
helped them develop

690
00:31:50,300 --> 00:31:53,266
better and cheaper products.

691
00:31:53,266 --> 00:31:56,000
If China had never become
the workshop of the world,

692
00:31:56,000 --> 00:31:59,833
I doubt we'd even be talking
about Chinese tech giants.

693
00:31:59,833 --> 00:32:04,200
DAN WANG:
And a lot of the manufacturing
workforce in China has expanded

694
00:32:04,200 --> 00:32:07,400
very significantly, in part
at the expense of the U.S.

695
00:32:07,400 --> 00:32:09,433
As we see from COVID-19,

696
00:32:09,433 --> 00:32:12,066
a lot of the U.S. manufacturers
in its early days

697
00:32:12,066 --> 00:32:17,433
struggled to make something
as simple as masks for people,

698
00:32:17,433 --> 00:32:19,266
as well as
cotton swabs for testing.

699
00:32:19,266 --> 00:32:21,200
The contrast that we see
in China is

700
00:32:21,200 --> 00:32:24,066
that manufacturers were able
to respond really quickly.

701
00:32:26,966 --> 00:32:30,033
KUO:
Manufacturing dominance creates
spillover advantages

702
00:32:30,033 --> 00:32:32,400
for Chinese entrepreneurs,

703
00:32:32,400 --> 00:32:37,333
advantages that show up
in unexpected places.

704
00:32:37,333 --> 00:32:40,366
KEVIN PAN (translated):
In 2014,

705
00:32:40,366 --> 00:32:42,566
I built a ten-megawatt
Bitcoin mine

706
00:32:42,566 --> 00:32:44,466
in the Inner Mongolia province.

707
00:32:44,466 --> 00:32:47,666
At that time, it was one
of China's largest facilities.

708
00:32:47,666 --> 00:32:50,133
Now, in 2021,

709
00:32:50,133 --> 00:32:56,033
I'm building the same kind of
facility here in the desert.

710
00:32:56,033 --> 00:32:57,666
(speaking Mandarin)

711
00:32:57,666 --> 00:33:01,066
(translated):
Except this time around,
it's 60 times larger.

712
00:33:01,066 --> 00:33:05,733
It's like coming full circle,
just in a new location.

713
00:33:05,733 --> 00:33:08,466
KUO:
Kevin Pan is the C.E.O.
of Poolin,

714
00:33:08,466 --> 00:33:12,166
one of the largest Bitcoin
mining operations in the world.

715
00:33:12,166 --> 00:33:16,500
A Bitcoin mining facility
is similar to a data center.

716
00:33:16,500 --> 00:33:20,200
Powerful computers operate
24/7 to run the Bitcoin network.

717
00:33:20,200 --> 00:33:22,333
For security,

718
00:33:22,333 --> 00:33:24,033
the network depends
on the participation

719
00:33:24,033 --> 00:33:26,366
of computers
scattered around the world

720
00:33:26,366 --> 00:33:31,033
to collectively
keep track of Bitcoin ownership.

721
00:33:31,033 --> 00:33:32,833
The system issues Bitcoins
to participants

722
00:33:32,833 --> 00:33:36,400
by rewarding those who solve
complex cryptographic puzzles,

723
00:33:36,400 --> 00:33:41,766
an activity that requires
huge amounts of electricity.

724
00:33:41,766 --> 00:33:45,400
Bitcoin mining was once
dominated by U.S. miners,

725
00:33:45,400 --> 00:33:47,733
but, as so often happens,

726
00:33:47,733 --> 00:33:50,266
China was quick
to get into the game,

727
00:33:50,266 --> 00:33:56,566
and grew to hold as much
as a 75% share of the industry.

728
00:33:56,566 --> 00:33:59,333
I'm especially interested
in asking Kevin what he thought

729
00:33:59,333 --> 00:34:05,200
gave China that edge, in this
and in so many other areas.

730
00:34:05,200 --> 00:34:06,633
(Pan speaking Mandarin)

731
00:34:06,633 --> 00:34:08,366
(translated):
It's almost unfathomable
how quick

732
00:34:08,366 --> 00:34:09,966
the supply chain is in Shenzhen.

733
00:34:09,966 --> 00:34:11,600
In America, it takes days

734
00:34:11,600 --> 00:34:14,700
to receive prototypes
for your designs.

735
00:34:14,700 --> 00:34:17,166
In Shenzhen,
if you send blueprints

736
00:34:17,166 --> 00:34:19,000
to a factory in the morning,

737
00:34:19,000 --> 00:34:22,233
they'll deliver
a prototype by the afternoon.

738
00:34:22,233 --> 00:34:23,966
It's a paradise
for any entrepreneur

739
00:34:23,966 --> 00:34:25,700
working with hardware.

740
00:34:25,700 --> 00:34:28,266
In other places,
you just can't do this.

741
00:34:28,266 --> 00:34:29,833
Only in Shenzhen.

742
00:34:31,933 --> 00:34:35,466
KUO:
Kevin built his massive Bitcoin
operation in China.

743
00:34:35,466 --> 00:34:39,800
And then the hammer came down.

744
00:34:39,800 --> 00:34:42,766
China's Central Bank cracked
down on cryptocurrencies,

745
00:34:42,766 --> 00:34:46,366
calling all crypto-related
activities illegal.

746
00:34:46,366 --> 00:34:50,033
It happened around the same time
as a wide-ranging tech crackdown

747
00:34:50,033 --> 00:34:52,066
that also hit social media
companies

748
00:34:52,066 --> 00:34:56,766
and online loan providers.

749
00:34:56,766 --> 00:34:58,300
As powerful
as the Chinese government is

750
00:34:58,300 --> 00:35:01,366
when it comes to rapidly
deploying infrastructure

751
00:35:01,366 --> 00:35:04,933
like 5G,
it can be equally harsh.

752
00:35:04,933 --> 00:35:08,266
And, essentially,
with the same stroke of a pen,

753
00:35:08,266 --> 00:35:10,133
it banned Kevin's entire
industry,

754
00:35:10,133 --> 00:35:15,366
citing the environmental
consequences of Bitcoin mining.

755
00:35:15,366 --> 00:35:17,600
(Pan speaking Mandarin)

756
00:35:17,600 --> 00:35:19,800
(translated):
Ever since we got shut down,

757
00:35:19,800 --> 00:35:24,566
the company's
been in a tough position.

758
00:35:24,566 --> 00:35:26,900
KUO:
So, what happened to Kevin?

759
00:35:26,900 --> 00:35:30,533
Turns out he wasn't
about to give up so easily.

760
00:35:30,533 --> 00:35:33,000
He just pulled up stakes
and started over in a new home.

761
00:35:33,000 --> 00:35:36,433
Where he has been welcomed
with open arms.

762
00:35:38,733 --> 00:35:43,033
I love Bitcoin because it's,
it's bringing freedom to people.

763
00:35:43,033 --> 00:35:45,133
You can protect
your own assets.

764
00:35:45,133 --> 00:35:46,700
And nobody won't...

765
00:35:46,700 --> 00:35:49,666
Nobody could, ever, ever
could took it from you.

766
00:35:49,666 --> 00:35:52,566
MAN:
So, where does it
actually exist?

767
00:35:52,566 --> 00:35:55,100
It's on the internet.
(chuckles)

768
00:35:55,100 --> 00:35:59,100
KUO:
Kevin's not alone
in jumping ship.

769
00:35:59,100 --> 00:36:02,066
Many entrepreneurs caught
in Chinese tech crackdowns

770
00:36:02,066 --> 00:36:05,033
have relocated to America.

771
00:36:05,033 --> 00:36:06,866
They're here because
the Chinese government

772
00:36:06,866 --> 00:36:08,766
takes an active role
in steering innovation.

773
00:36:08,766 --> 00:36:13,200
Policymakers funnel
talent and money into industries

774
00:36:13,200 --> 00:36:15,133
they view as important.

775
00:36:15,133 --> 00:36:16,866
At the same time,

776
00:36:16,866 --> 00:36:18,766
they shut down industries
they view as wasteful,

777
00:36:18,766 --> 00:36:21,900
risky, or frivolous.

778
00:36:28,200 --> 00:36:30,333
PAN (translated):
When China shut us down,

779
00:36:30,333 --> 00:36:32,933
we immediately complied
with the law.

780
00:36:32,933 --> 00:36:37,233
But in our hearts,
we felt hopeless.

781
00:36:37,233 --> 00:36:40,300
We spent so long
building so much,

782
00:36:40,300 --> 00:36:43,833
and it was all torn down
in a single night.

783
00:36:43,833 --> 00:36:47,100
We either had to give up
or start from scratch.

784
00:36:49,633 --> 00:36:51,633
KUO:
Today, Kevin and his team

785
00:36:51,633 --> 00:36:54,266
of Bitcoin miners are meeting
with Kenneth Winkles,

786
00:36:54,266 --> 00:36:58,400
head of a local economic
development organization.

787
00:36:58,400 --> 00:36:59,866
Good to see you again,
sir.

788
00:36:59,866 --> 00:37:03,100
How many total
megawatts will you be utilizing

789
00:37:03,100 --> 00:37:04,933
once you're up and running?

790
00:37:04,933 --> 00:37:08,266
Yeah, this one
is about 100 megawatts.
Okay.

791
00:37:08,266 --> 00:37:11,433
WINKLES:
I don't believe
that what happened in China

792
00:37:11,433 --> 00:37:14,333
will happen in the United
States, I really don't.

793
00:37:14,333 --> 00:37:16,233
We've got a very stable

794
00:37:16,233 --> 00:37:18,866
type of government, whether
you're a red or a blue state.

795
00:37:18,866 --> 00:37:20,700
You happen to be in a red state.

796
00:37:20,700 --> 00:37:23,733
Texas is business-friendly,
so you're not going

797
00:37:23,733 --> 00:37:25,766
to see somebody come in and say,

798
00:37:25,766 --> 00:37:28,266
"No, you can't do that
in my backyard."

799
00:37:28,266 --> 00:37:29,333
Yeah.
Okay.

800
00:37:29,333 --> 00:37:32,100
KUO:
Crypto was banned in China

801
00:37:32,100 --> 00:37:35,033
because the Chinese state uses
its strong central authority

802
00:37:35,033 --> 00:37:36,766
to guide innovation

803
00:37:36,766 --> 00:37:38,533
as it sees fit.

804
00:37:38,533 --> 00:37:40,600
But is it just driving out
the disruptors

805
00:37:40,600 --> 00:37:44,566
and original thinkers needed
to foster true innovation?

806
00:37:44,566 --> 00:37:48,766
There's no shortage
of strong opinions.

807
00:37:48,766 --> 00:37:51,300
I've seen many times
in Chinese bookstores,

808
00:37:51,300 --> 00:37:53,066
there are many, many books in
those bookstores that say,

809
00:37:53,066 --> 00:37:54,933
"Where is China's Steve Jobs?"

810
00:37:54,933 --> 00:37:57,400
 
And this is a question
that China itself is asking.

811
00:37:57,400 --> 00:37:59,433
And so, I do believe ultimately

812
00:37:59,433 --> 00:38:01,866
that it's the combination
of the American free market

813
00:38:01,866 --> 00:38:03,966
with our democratic system

814
00:38:03,966 --> 00:38:06,333
that ultimately is best
for fostering innovation.

815
00:38:06,333 --> 00:38:08,266
Beijing's vision
of the technological future

816
00:38:08,266 --> 00:38:11,333
is a little bit different
from California's.

817
00:38:11,333 --> 00:38:13,000
In its view,
a lot of social media companies

818
00:38:13,000 --> 00:38:15,500
are actually creating
a lot of social unrest.

819
00:38:15,500 --> 00:38:17,333
And frankly, it doesn't see

820
00:38:17,333 --> 00:38:19,233
a great use for crypto currency,

821
00:38:19,233 --> 00:38:21,033
which is almost explicitly
designed

822
00:38:21,033 --> 00:38:22,700
to be out of state control.

823
00:38:22,700 --> 00:38:25,266
There are certainly efforts
by the government

824
00:38:25,266 --> 00:38:27,966
to redirect talent and capital

825
00:38:27,966 --> 00:38:30,333
toward so-called
hard tech sectors,

826
00:38:30,333 --> 00:38:34,866
such as climate tech, such as
electric vehicles, et cetera.

827
00:38:36,066 --> 00:38:39,666
KUO:
China's government
guides innovation into areas

828
00:38:39,666 --> 00:38:41,366
that it deems important.

829
00:38:41,366 --> 00:38:43,166
But can a single institution

830
00:38:43,166 --> 00:38:46,700
always choose the right winners?

831
00:38:46,700 --> 00:38:48,400
Either way,
it does seem to be working

832
00:38:48,400 --> 00:38:50,500
for a number of key industries.

833
00:38:50,500 --> 00:38:54,266
And the Chinese model
of a heavier state hand

834
00:38:54,266 --> 00:38:57,533
seems to be gaining influence
worldwide.

835
00:38:57,533 --> 00:39:01,733
The challenge of competing
with China has caused people

836
00:39:01,733 --> 00:39:05,400
to reassess whether
the market alone can create

837
00:39:05,400 --> 00:39:08,600
and mobilize the resources for
innovation in the United States.

838
00:39:08,600 --> 00:39:11,033
And the belief,
I think, is that it can't,

839
00:39:11,033 --> 00:39:13,300
especially when you're competing
with a country

840
00:39:13,300 --> 00:39:15,833
where the government
has been able to mobilize

841
00:39:15,833 --> 00:39:19,000
such vast sums of resources
in the same areas.

842
00:39:19,000 --> 00:39:22,933
KUO:
And so the U.S. government has
put its own thumb on the scale

843
00:39:22,933 --> 00:39:26,433
with the 2022 passage
of the CHIPS and Science Act,

844
00:39:26,433 --> 00:39:29,000
injecting public money

845
00:39:29,000 --> 00:39:31,233
into the semiconductor industry.

846
00:39:31,233 --> 00:39:33,500
Today's computer chips
are easily

847
00:39:33,500 --> 00:39:36,266
the most complex devices
ever made,

848
00:39:36,266 --> 00:39:40,500
and they're also seen now as
a critical strategic resource.

849
00:39:40,500 --> 00:39:42,600
Besides trying to jump-start
domestic production,

850
00:39:42,600 --> 00:39:45,566
the U.S. and the West are
also trying to keep

851
00:39:45,566 --> 00:39:49,133
the means of production
out of China's hands.

852
00:39:50,866 --> 00:39:53,066
DAN WANG:
Without advanced semiconductors,

853
00:39:53,066 --> 00:39:54,266
there is no way
that China can have

854
00:39:54,266 --> 00:39:56,833
a thriving
technological industry.

855
00:39:56,833 --> 00:40:00,200
China is now out of the starting
gate in semiconductors,

856
00:40:00,200 --> 00:40:03,366
but in the most rosy view,
it is probably

857
00:40:03,366 --> 00:40:06,466
at least five to 15 years
behind the U.S.

858
00:40:06,466 --> 00:40:09,433
in terms of the most crucial
semiconductor technologies.

859
00:40:10,500 --> 00:40:13,300
KUO:
Computer chips are solid pieces
of silicon and metal

860
00:40:13,300 --> 00:40:16,700
with literally billions
of tiny electronic switches

861
00:40:16,700 --> 00:40:19,533
packed into a very small space.

862
00:40:19,533 --> 00:40:21,500
Since the 1970s,

863
00:40:21,500 --> 00:40:23,100
the key to increasing the power

864
00:40:23,100 --> 00:40:27,133
and speed of computers has been
tied directly

865
00:40:27,133 --> 00:40:29,333
to the density
of those switches.

866
00:40:29,333 --> 00:40:32,000
As they've shrunk down
to the atomic scale,

867
00:40:32,000 --> 00:40:33,833
the technology required
to make them

868
00:40:33,833 --> 00:40:36,000
has become increasingly costly
and complex.

869
00:40:36,000 --> 00:40:39,233
Pushing the envelope
of chip innovation

870
00:40:39,233 --> 00:40:41,300
is like building a pyramid.

871
00:40:41,300 --> 00:40:43,433
Everything rests
on what came below.

872
00:40:43,433 --> 00:40:48,600
And China's pyramid
is really just getting started.

873
00:40:48,600 --> 00:40:52,033
MULVENON:
One of the most dramatic
consequences

874
00:40:52,033 --> 00:40:54,900
of the trade war with China

875
00:40:54,900 --> 00:40:57,200
was the exposure
of China's dependence

876
00:40:57,200 --> 00:41:00,966
on high-quality and high-end
semiconductor chips

877
00:41:00,966 --> 00:41:04,600
from the United States and Japan
and Korea and Taiwan,

878
00:41:04,600 --> 00:41:05,966
and I would say right now

879
00:41:05,966 --> 00:41:08,633
that catch-up
in the semiconductor space

880
00:41:08,633 --> 00:41:11,000
is probably the single greatest
challenge

881
00:41:11,000 --> 00:41:13,900
that the Chinese technology
sphere currently faces

882
00:41:13,900 --> 00:41:16,200
and the, the highest hill
that they have to climb.

883
00:41:18,433 --> 00:41:20,033
KUO:
This is a Huawei cell phone
factory.

884
00:41:20,033 --> 00:41:21,600
Just a few years ago,

885
00:41:21,600 --> 00:41:24,900
Huawei was on track to become
the leading maker

886
00:41:24,900 --> 00:41:27,700
of mobile phones in the world.

887
00:41:27,700 --> 00:41:29,433
Then the U.S. government
cut off their access

888
00:41:29,433 --> 00:41:32,833
to advanced semiconductors.

889
00:41:32,833 --> 00:41:35,300
DAN WANG:
Huawei has had
a lot of different problems

890
00:41:35,300 --> 00:41:37,833
with trying
to maintain production.

891
00:41:37,833 --> 00:41:41,033
There's simply no way to be
a major technology provider

892
00:41:41,033 --> 00:41:43,400
if you don't have the most
advanced semiconductors

893
00:41:43,400 --> 00:41:45,966
 
in the world,
and so at this point,

894
00:41:45,966 --> 00:41:47,700
Huawei's revenues
have collapsed,

895
00:41:47,700 --> 00:41:50,333
mostly because its smartphone
business has collapsed.

896
00:41:50,333 --> 00:41:52,366
It was, at, for one period,

897
00:41:52,366 --> 00:41:54,733
the second-largest smartphone
maker in the world.

898
00:41:54,733 --> 00:41:57,400
Today, it is just barely in
the running

899
00:41:57,400 --> 00:42:00,300
for being the top tenth largest
smartphone makers in the world.

900
00:42:01,866 --> 00:42:03,433
KUO:
In Chandler, Arizona,

901
00:42:03,433 --> 00:42:08,266
I visit an Intel semiconductor
factory, also known as a fab.

902
00:42:09,933 --> 00:42:11,966
Here, Intel is building

903
00:42:11,966 --> 00:42:14,400
a new state-of-the art facility.

904
00:42:14,400 --> 00:42:16,233
♪ ♪

905
00:42:16,233 --> 00:42:19,800
If any one place
represents the front line

906
00:42:19,800 --> 00:42:22,633
of the tech war today,
this is it.

907
00:42:22,633 --> 00:42:25,800
HUGH GREEN:
Welcome to Fab 42.

908
00:42:25,800 --> 00:42:30,800
You're in one of
Intel's most advanced factories.

909
00:42:30,800 --> 00:42:33,200
 
Very large outfit here
that we run

910
00:42:33,200 --> 00:42:36,100
with a lot of different people

911
00:42:36,100 --> 00:42:37,833
doing various activities.

912
00:42:37,833 --> 00:42:39,800
KUO:
Semiconductors process the data

913
00:42:39,800 --> 00:42:42,566
that run through digital
devices.

914
00:42:42,566 --> 00:42:45,833
GREEN:
We start our process
with a bare silicon wafer.

915
00:42:45,833 --> 00:42:48,366
It looks like a pizza,

916
00:42:48,366 --> 00:42:49,766
300 millimeters in diameter.

917
00:42:51,200 --> 00:42:54,533
KUO:
Digital electronics
work by processing our voice,

918
00:42:54,533 --> 00:42:56,333
the videos we watch,
and the data we collect

919
00:42:56,333 --> 00:42:57,800
into a binary code

920
00:42:57,800 --> 00:43:01,533
that can be transmitted
between us.

921
00:43:01,533 --> 00:43:06,033
This is the language
of computers and the internet.

922
00:43:06,033 --> 00:43:10,266
What creates this code
are switches called transistors.

923
00:43:10,266 --> 00:43:12,000
At the heart of computers today

924
00:43:12,000 --> 00:43:13,700
are tiny wafers of silicon

925
00:43:13,700 --> 00:43:16,800
that can hold more than
100 billion transistors

926
00:43:16,800 --> 00:43:19,666
in just a few square
centimeters.

927
00:43:21,900 --> 00:43:24,066
The switches
of today's computers

928
00:43:24,066 --> 00:43:25,666
are only a few atoms wide,

929
00:43:25,666 --> 00:43:28,533
only visible under an electron
microscope.

930
00:43:28,533 --> 00:43:31,100
Arranged by millions
of minuscule networks,

931
00:43:31,100 --> 00:43:32,666
they look like farmland

932
00:43:32,666 --> 00:43:35,733
viewed from 30,000 feet.

933
00:43:35,733 --> 00:43:38,933
The connections between them
are just as tiny.

934
00:43:38,933 --> 00:43:41,000
On this package itself,

935
00:43:41,000 --> 00:43:43,966
there are 1.1 million
interconnects.

936
00:43:43,966 --> 00:43:45,566
And of those interconnects,

937
00:43:45,566 --> 00:43:47,433
about 980,000 of those
interconnects

938
00:43:47,433 --> 00:43:49,066
are at Intel's state of the art.

939
00:43:49,066 --> 00:43:52,100
KUO:
The mindbogglingly complex
layout

940
00:43:52,100 --> 00:43:54,300
of these impossibly small
components

941
00:43:54,300 --> 00:43:57,766
is printed onto the silicon
by lithography,

942
00:43:57,766 --> 00:43:59,833
using focused ultraviolet
light waves

943
00:43:59,833 --> 00:44:03,366
that are just 13-billionths
of a meter long.

944
00:44:03,366 --> 00:44:05,833
Atom by atom,
different metals are deposited

945
00:44:05,833 --> 00:44:09,533
by machines of
almost unimaginable precision.

946
00:44:11,766 --> 00:44:13,866
KEYVAN ESFARJANI:
Building these chips
requires an infrastructure.

947
00:44:13,866 --> 00:44:16,266
It requires factories.

948
00:44:16,266 --> 00:44:18,766
Even though the chips are very,
very tiny,

949
00:44:18,766 --> 00:44:20,633
the factories that build them

950
00:44:20,633 --> 00:44:22,633
are quite, you know, elaborate.

951
00:44:22,633 --> 00:44:27,666
You have clean rooms
that are 10,000 times cleaner

952
00:44:27,666 --> 00:44:30,866
than where you do heart surgery.

953
00:44:32,066 --> 00:44:34,633
KUO:
Each new generation
of fabrication machinery

954
00:44:34,633 --> 00:44:36,966
is an advance
on what came before it.

955
00:44:38,333 --> 00:44:41,233
Starting in the 1970s,
Moore's Law predicted

956
00:44:41,233 --> 00:44:44,033
that chip technology
would improve so rapidly

957
00:44:44,033 --> 00:44:46,066
that the number of transistors
on a chip

958
00:44:46,066 --> 00:44:49,066
would double every 18 months.

959
00:44:49,066 --> 00:44:51,933
This has held mostly true
so far,

960
00:44:51,933 --> 00:44:54,600
making it almost impossible

961
00:44:54,600 --> 00:44:56,600
for newcomers to the game
to catch up

962
00:44:56,600 --> 00:45:00,666
without relying on equipment
produced by just a few

963
00:45:00,666 --> 00:45:02,833
standard-setting companies.

964
00:45:02,833 --> 00:45:04,833
ESFARJANI:
Imagine you have billions
of transistors

965
00:45:04,833 --> 00:45:06,866
on a, you know, your fingernail.

966
00:45:06,866 --> 00:45:09,500
If a small defects,
and I mean small defects,

967
00:45:09,500 --> 00:45:12,100
being, like, like, a size
of a, you know, molecule,

968
00:45:12,100 --> 00:45:13,566
or even a DNA,

969
00:45:13,566 --> 00:45:16,300
the whole thing breaks apart.

970
00:45:16,300 --> 00:45:20,900
KUO:
This Intel fab
is unique for America.

971
00:45:20,900 --> 00:45:22,800
It's a little bit
like the Chinese model,

972
00:45:22,800 --> 00:45:25,100
with research and development
groups embedded

973
00:45:25,100 --> 00:45:27,633
within full-scale
manufacturing facilities.

974
00:45:27,633 --> 00:45:30,466
I asked
researcher Rahul Manepalli

975
00:45:30,466 --> 00:45:32,300
what he ought
about the connection

976
00:45:32,300 --> 00:45:36,266
between manufacturing and R&D.

977
00:45:36,266 --> 00:45:38,000
MANEPALLI:
What is lost when we

978
00:45:38,000 --> 00:45:41,600
do not do R&D and manufacturing
in-house?

979
00:45:41,600 --> 00:45:44,866
I think that's, it's probably
a longer-term view

980
00:45:44,866 --> 00:45:46,366
you got to look at.

981
00:45:46,366 --> 00:45:49,000
When you stop
doing manufacturing,

982
00:45:49,000 --> 00:45:51,966
it's not the immediate
generation,

983
00:45:51,966 --> 00:45:53,233
but the next generation
of products

984
00:45:53,233 --> 00:45:55,700
you lose your expertise in,
and over time,

985
00:45:55,700 --> 00:45:58,100
you can lose expertise

986
00:45:58,100 --> 00:46:00,266
in critical skills
that are required

987
00:46:00,266 --> 00:46:02,600
to advance the technology.

988
00:46:02,600 --> 00:46:05,566
KUO:
It's not a stretch to say
that here,

989
00:46:05,566 --> 00:46:07,266
the U.S. is relearning a lesson

990
00:46:07,266 --> 00:46:09,333
that China
is already committed to.

991
00:46:09,333 --> 00:46:12,166
It's a reminder
of what America may have lost

992
00:46:12,166 --> 00:46:13,866
in allowing the decline

993
00:46:13,866 --> 00:46:17,233
of its own manufacturing sector.

994
00:46:17,233 --> 00:46:21,066
But it's also a testament
to some of America's strengths.

995
00:46:21,066 --> 00:46:24,233
MANEPALLI:
We have about 100 PhDs
working in this facility,

996
00:46:24,233 --> 00:46:26,866
and we, we do care
about diversity--

997
00:46:26,866 --> 00:46:28,333
diversity of thought,

998
00:46:28,333 --> 00:46:30,933
diversity of opinion,
diversity of views.

999
00:46:30,933 --> 00:46:33,900
KUO:
As I look around,
I see top scientists

1000
00:46:33,900 --> 00:46:36,333
from many countries
working here.

1001
00:46:36,333 --> 00:46:39,633
They come from Europe, India,
and even China

1002
00:46:39,633 --> 00:46:41,700
to provide
different perspectives

1003
00:46:41,700 --> 00:46:45,566
on how to solve
difficult problems.

1004
00:46:45,566 --> 00:46:47,200
This is something
that I never really saw

1005
00:46:47,200 --> 00:46:49,100
in Chinese research labs,

1006
00:46:49,100 --> 00:46:50,966
and it's one of the many reasons

1007
00:46:50,966 --> 00:46:53,766
why Chinese companies are
having such a difficult time

1008
00:46:53,766 --> 00:46:55,266
catching up in semiconductors.

1009
00:46:59,133 --> 00:47:02,133
In this facility,
the most cutting-edge

1010
00:47:02,133 --> 00:47:04,966
lithography machines
are from the Netherlands.

1011
00:47:04,966 --> 00:47:07,733
The chip designs are from
California.

1012
00:47:07,733 --> 00:47:09,400
 
Minerals for chip making
processes

1013
00:47:09,400 --> 00:47:11,533
come from all over the world.

1014
00:47:11,533 --> 00:47:13,833
Producing something
as complicated

1015
00:47:13,833 --> 00:47:17,266
as a semiconductor requires
international cooperation.

1016
00:47:17,266 --> 00:47:19,800
There isn't a country
in the world

1017
00:47:19,800 --> 00:47:21,433
that can do it alone.

1018
00:47:21,433 --> 00:47:25,933
But now, China will have to try.

1019
00:47:25,933 --> 00:47:28,966
In late 2022,
the U.S. government expanded

1020
00:47:28,966 --> 00:47:30,933
its tech war on China.

1021
00:47:30,933 --> 00:47:33,733
New regulations forced
all Americans

1022
00:47:33,733 --> 00:47:35,666
working in the semiconductor
industry

1023
00:47:35,666 --> 00:47:39,366
in China to resign
or renounce their citizenship.

1024
00:47:39,366 --> 00:47:41,933
The restrictions
are only expanding in scope.

1025
00:47:41,933 --> 00:47:43,766
What started as an attempt

1026
00:47:43,766 --> 00:47:46,300
to choke select companies
like Huawei

1027
00:47:46,300 --> 00:47:51,333
seems to be expanding to
the entire Chinese tech sector.

1028
00:47:51,333 --> 00:47:55,133
So it was a very comprehensive
set of rules

1029
00:47:55,133 --> 00:47:58,100
designed, really, to, to allow
the U.S.

1030
00:47:58,100 --> 00:48:03,166
 
to control just exactly
what capability China would have

1031
00:48:03,166 --> 00:48:05,500
across the semiconductor
manufacturing space.

1032
00:48:05,500 --> 00:48:08,200
And so, China...
(chuckles)

1033
00:48:08,200 --> 00:48:11,433
...um, faces a really
significant problem.

1034
00:48:11,433 --> 00:48:15,300
No country has ever attempted
to recreate, for example,

1035
00:48:15,300 --> 00:48:19,633
all the pieces of
the semiconductor manufacturing

1036
00:48:19,633 --> 00:48:21,366
supply chain on its own.

1037
00:48:22,866 --> 00:48:24,366
KUO:
Back at Huawei,

1038
00:48:24,366 --> 00:48:26,500
the company is on a war footing.

1039
00:48:26,500 --> 00:48:28,866
Cut off from the technology
it needs

1040
00:48:28,866 --> 00:48:30,166
to power their products,

1041
00:48:30,166 --> 00:48:32,666
they know
they need to move fast.

1042
00:48:32,666 --> 00:48:34,966
The way the Chinese
typically respond

1043
00:48:34,966 --> 00:48:37,900
to efforts like that is,

1044
00:48:37,900 --> 00:48:40,200
they redouble their efforts
to innovate internally.

1045
00:48:40,200 --> 00:48:41,866
(speaking Mandarin)

1046
00:48:41,866 --> 00:48:43,433
(translated):
As you may know,

1047
00:48:43,433 --> 00:48:45,733
our supply of semiconductors
was choked off.

1048
00:48:45,733 --> 00:48:49,200
We can't make them.

1049
00:48:49,200 --> 00:48:50,700
But I can feel it.

1050
00:48:50,700 --> 00:48:52,266
The whole of society is working

1051
00:48:52,266 --> 00:48:54,200
to find a way out
of this problem.

1052
00:48:54,200 --> 00:48:56,033
Of course, here in this lab,

1053
00:48:56,033 --> 00:48:58,366
we are focused
on our own problems.

1054
00:48:58,366 --> 00:49:00,500
But you could say we're working

1055
00:49:00,500 --> 00:49:03,300
on the fundamental problem
this country faces.

1056
00:49:03,300 --> 00:49:05,666
(speaking Mandarin)

1057
00:49:05,666 --> 00:49:07,466
(translated):
How do we get
around the pressure

1058
00:49:07,466 --> 00:49:11,000
that has been put on us?

1059
00:49:11,000 --> 00:49:12,766
Is another route possible

1060
00:49:12,766 --> 00:49:15,400
that doesn't rely
on semiconductors?

1061
00:49:16,900 --> 00:49:18,600
KUO:
In the Huawei R&D labs,

1062
00:49:18,600 --> 00:49:21,533
researchers study how to use
light to process data,

1063
00:49:21,533 --> 00:49:24,233
rather than
using traditional chips.

1064
00:49:24,233 --> 00:49:27,166
Losing access to
the most cutting-edge chips

1065
00:49:27,166 --> 00:49:29,066
has slowed down the progress

1066
00:49:29,066 --> 00:49:33,466
of many of the most prominent
Chinese tech giants.

1067
00:49:33,466 --> 00:49:36,200
Or has it lit a fire?

1068
00:49:36,200 --> 00:49:39,500
In August 2023,
Huawei stunned the world

1069
00:49:39,500 --> 00:49:42,133
by announcing a new phone

1070
00:49:42,133 --> 00:49:45,133
with a seven-nanometer
Chinese-made chip,

1071
00:49:45,133 --> 00:49:48,133
more advanced than anything
anyone thought

1072
00:49:48,133 --> 00:49:50,933
China could make so quickly.

1073
00:49:50,933 --> 00:49:54,266
It was a real morale boost
for the Chinese tech sector.

1074
00:49:55,533 --> 00:49:59,400
(Gao speaking Mandarin)

1075
00:49:59,400 --> 00:50:01,533
(translated):
China is trying to be held back,

1076
00:50:01,533 --> 00:50:05,900
but we will innovate ourselves
out of the problem.

1077
00:50:05,900 --> 00:50:07,833
KUO:
The rise
of Chinese tech giants

1078
00:50:07,833 --> 00:50:10,900
has changed the world.

1079
00:50:10,900 --> 00:50:13,400
China's model of innovation
created world-leading companies.

1080
00:50:13,400 --> 00:50:17,533
While many insist
that China did not come

1081
00:50:17,533 --> 00:50:19,866
by these gains honestly,

1082
00:50:19,866 --> 00:50:22,533
relying on intellectual property
theft and predatory pricing,

1083
00:50:22,533 --> 00:50:25,233
they still did it,

1084
00:50:25,233 --> 00:50:27,933
and they did it with a different
ethos and manufacturing focus

1085
00:50:27,933 --> 00:50:32,766
that challenges expectations
of how innovation happens.

1086
00:50:32,766 --> 00:50:34,733
They rose in a time
of globalization,

1087
00:50:34,733 --> 00:50:37,766
but their very ascent
triggered a tech war.

1088
00:50:39,366 --> 00:50:42,233
SCANLAN:
In my personal opinion,
it slowed down the world.

1089
00:50:42,233 --> 00:50:43,833
Slowed down the world.

1090
00:50:43,833 --> 00:50:45,966
We could have been
far more advanced

1091
00:50:45,966 --> 00:50:47,900
in a lot of areas--
in healthcare,

1092
00:50:47,900 --> 00:50:51,666
education, and a lot of the
industrial applications of 5G.

1093
00:50:51,666 --> 00:50:53,533
Because we would've had
more engagement,

1094
00:50:53,533 --> 00:50:56,966
more sharing of ideas, rather
than, "Not invented here,"

1095
00:50:56,966 --> 00:50:59,666
"That's an Eastern thing,
we're a Western."

1096
00:50:59,666 --> 00:51:01,200
 
You know,
that sort of mentality?

1097
00:51:01,200 --> 00:51:03,433
Unfortunate for the world.

1098
00:51:03,433 --> 00:51:05,400
MULVENON:
I think the preference
is to be able

1099
00:51:05,400 --> 00:51:07,200
to be, reduce our dependence

1100
00:51:07,200 --> 00:51:10,700
on the Chinese supply chain.

1101
00:51:10,700 --> 00:51:14,000
Hyperglobalization had
really gone too far

1102
00:51:14,000 --> 00:51:18,200
and had not taken sufficiently
into account geopolitics.

1103
00:51:18,200 --> 00:51:20,633
GALLAGHER:
Trying to hamstring
China's ability

1104
00:51:20,633 --> 00:51:25,533
to innovate is really the wrong
answer to the question.

1105
00:51:25,533 --> 00:51:27,133
And if the question is
how can the U.S.

1106
00:51:27,133 --> 00:51:28,766
become more competitive,

1107
00:51:28,766 --> 00:51:31,866
it needs to get its own
house in order and compete.

1108
00:51:31,866 --> 00:51:34,400
♪ ♪

1109
00:51:35,533 --> 00:51:38,233
Mom, it's not working!

1110
00:51:38,233 --> 00:51:40,333
TRIOLO:
The reason you can have
that iPhone

1111
00:51:40,333 --> 00:51:42,533
with so much capability
in your hand

1112
00:51:42,533 --> 00:51:45,333
is the result of globalization.

1113
00:51:45,333 --> 00:51:49,200
So, that iPhone represents parts
coming from all over the world.

1114
00:51:49,200 --> 00:51:51,866
So, what we've seen
over the last two years

1115
00:51:51,866 --> 00:51:54,433
is essentially
a reversal of that process.

1116
00:51:54,433 --> 00:51:57,233
PODCAST ANNOUNCER:
Produced in partnership
with the China Project.

1117
00:51:57,233 --> 00:51:59,600
KUO:
What comes next? I don't know.

1118
00:51:59,600 --> 00:52:01,900
But I believe
that Chinese technology

1119
00:52:01,900 --> 00:52:03,466
will continue
to change the world,

1120
00:52:03,466 --> 00:52:06,233
for better or worse.

1121
00:52:06,233 --> 00:52:08,433
♪ ♪

1122
00:52:32,300 --> 00:52:39,833
♪ ♪

1123
00:52:41,466 --> 00:52:49,000
♪ ♪

1124
00:52:50,633 --> 00:52:58,166
♪ ♪

1125
00:53:03,966 --> 00:53:11,133
♪ ♪