Notes on China

Summary

• Chinese AI labs feel capital constrained — the biggest surprise from talking to Chinese VCs and researchers at their AI labs during Dwarkesh’s two-week trip. Moonshot AI, “one of China’s leading AI labs,” raised $1B at a $3B valuation while “just xAI’s new cluster in Memphis alone will cost $3 to $4 billion.” The funding gap underscores how capital constrained Chinese AI labs feel.
• The 2021 crackdown left the tech ecosystem shell-shocked: with money stuck between “the measly 2% yield from state banks” and a “perpetually struggling stock market,” IPOs subject to random cancellation, and exits that “really suck,” Chinese valuations are chronically low — “a good reminder of how easy it is to completely wreck an innovation landscape that depends on risk-taking investors.” One VC half-jokingly asked Dwarkesh to help get his money out.
• Supply-side China vs. demand-side America: “We subsidize demand and restrict supply. They subsidize supply and restrict demand. We can’t rebuild fallen bridges, they build bridges to nowhere.” The scale is staggering — Chongqing as an over-20M-person “cyberpunk, multi-level metropolis” — but its skyscrapers were put up by a country with $10K GDP per capita, potentially half or a quarter of that when many went up, with ghostly towns visible from the train.
• Public opinion is genuinely unreadable in a society “where you can’t establish common knowledge”: one source says the young generation is quite nationalistic; he says “the current regime is way more liberal than what would result from an actual election in China”; another says nationalists are a vocal 10% minority “similar to the wokes in America circa 2020.”
• Youth stress and a mismatch labor market: 9-9-6 “is not a myth,” many of his friends with prestigious degrees are moving away from Shanghai and Beijing for less ambitious, lower-paying careers in smaller cities, and one explanation for the demographic-collapse-plus-youth-unemployment puzzle is that educated youth “just won’t take the low-skilled positions that their parents and grandparents did” — a shortage of high-skilled positions, not of jobs.
• Dwarkesh’s caveat on his own method: “You’re not going to learn that much about the risk of a war or the state of the AI race by gazing at skylines and chatting up taxi drivers” — the trip is “the beginning of my curiosity about the country, and not the capstone,” with the real questions (how Xi decides, what it implies “at the brink of AGI”) still open.

Deep dive

1. Everything is so f*ing big — and ugly

• Dwarkesh’s overwhelming first impression: the “stupendous scale” of the cities. Even Emeishan (pop. ~500K, “a quaint countryside town by Chinese standards”) had a Buddhist temple like “some sort of inverse nesting doll” — five or six times, each structure grander than the last, nearly empty of visitors. The monk’s funding explanation: “We’ve got a lot of supporters, dude.”
• Chongqing is “by far the coolest city I’ve ever visited” — over 20M people, a two-floor hotel room over two rivers for $60. Looking over the skyline he thought of the Hubble image: zoom anywhere and behind the fog, another skyscraper of hundreds or thousands of people.
• The catch: these towers went up in a country with $10K GDP per capita, potentially half or a quarter of that when many went up, and unlike the West’s beautiful early-20th-century building boom at similar income levels, they’re “boxes of mostly concrete with visible blight.” If the construction binge is over, China built out during “particularly uninspired architecture.”
• Beijing reads as Seeing Like a State: blocks of ten 30-story buildings split by eight-lane roads — a layout that let zero-COVID authorities lock down tens of thousands “by simply guarding a few entrance gates.” Only a fraction of hutongs survived. “Dare I say that Beijing is too YIMBY?”

2. Nationalism, surveillance, and surprising openness

• The mixed signals are the point — no common knowledge means no legible public opinion. One insight worth keeping: the younger generation’s nationalism “increasingly gives lie” to the American talking point that we’re against the CCP but not the Chinese people. The counter-read: nationalists are 10% who “aggressively shout down others on Weibo” while most classmates at top universities are “simply apolitical.”
• No visible cult of personality: he doesn’t think he saw a single picture of Xi on billboards, screens, or walls. Yet “cameras everywhere” — Dwarkesh’s genuinely naive question: “Are they really trying to prevent somebody from fomenting an insurrection between two garbage cans?”
• Despite this, people chatted openly about the bad economy, implicated government decisions, casually raised Tiananmen and the Cultural Revolution — one even discussed regime-change odds at a public restaurant. “It’s an authoritarian system… but it definitely isn’t North Korea.”
• The Emeishan grandfather pointed out a Uyghur rug and explained that “we have amazing relationships with minorities here in China” — Dwarkesh didn’t think this was a theatrical attempt to contradict Western propaganda; it seemed he genuinely didn’t know what is said about the treatment of Uyghurs in the West. Asked about his first job, he monologued on Mao-era military geography instead: “Grandpas are the same everywhere.”

3. Stressed youth, no public intellectuals, no ideology

• Chongqing high schoolers: 2-3 hours of TikTok daily, feeds of “just sexy girls.” Many young people — a musician writing songs about youth anxiety, even modeling-school students — reported intense pressure; a returnee from Australia said first-tier cities pay twice as much but the hours are “truly insane.”
• Dwarkesh’s puzzle — demographic collapse and youth unemployment — got one proposed explanation: educated youth “just won’t take the low-skilled positions that their parents and grandparents did,” so the shortage is in high-skilled jobs matching aspirations.
• There doesn’t seem to be a Chinese popular-intellectual ecosystem like Jordan Peterson, Sam Harris, Joe Rogan, or Lex Fridman — viral Bilibili professors cover practical finance, but “grand takes about what’s happening in the world” don’t seem to be that common. The rare effective altruists he met explained: people “just aren’t into organizing their decisions using some ideological lens” — the refrain “China is still a developing country” implies it can’t afford idealism yet.

4. Capital-starved AI and a shell-shocked tech ecosystem

• The load-bearing datapoint: Moonshot AI raised $1B at a $3B valuation, versus $3-4B for xAI’s Memphis cluster alone. Chinese VCs and lab researchers felt genuinely capital constrained.
• The mechanism behind chronically low valuations: money in China faces 2% state-bank yields or terrible equities; no guarantee of the next round; “the government might randomly cancel your IPO.” Post-2021-crackdown, the ecosystem is “quite shell-shocked” — a reminder of how easy it is to completely wreck an innovation landscape that depends on risk-taking investors.

5. How to win hearts and minds — and what travel is actually for

• Dwarkesh’s proposal for a U.S. president: conspicuously compliment Chinese people, values, and culture in every speech, do “aw-shucks conversations in Mandarin” that go viral on Bilibili and TikTok — clips that would likely stay up because “it’s just a weird thing to censor.” Admiring Chinese people “who genuinely are f*ing killing it everywhere where they’re not held down by communism” undermines the regime’s narrative that the West is “hell-bent on holding the Chinese people back.”
• His honest method critique, via Noah Smith: for war risk or the AI race you need princelings, researchers, and CEOs — and if you have that access, “you can just hop on a Zoom call.” That “should update you in favor of doing more Zoom calls, not less travel.”
• What travel is for: “you start asking questions about the places you visit that you wouldn’t even think to ask about the place you live.” And the closing meta-lesson from two weeks AFK on a burner phone: “what’s lacking in life is not time… if you’re working on the right thing, you can advance by leaps and bounds in just 8 hours. But if you’re just clearing the slog, you can spend a whole lifetime staying in the same place.”