China Road Trip Exposes List of Uninvestable Assets in the West (yahoo.com)
- Reference: 0179462648
- News link: https://slashdot.org/story/25/09/22/1558259/china-road-trip-exposes-list-of-uninvestable-assets-in-the-west
- Source link: https://finance.yahoo.com/news/china-road-trip-exposes-list-160000551.html
> Venture capitalists in clean tech are starting to say out loud what they've suspected for a while: [1]China's dominance has left key sectors in the West uninvestable . A group of eight VCs from Western firms agreed to share with Bloomberg the details of a July road trip across China during which they visited factories, spoke with startup investors, and interviewed founders of companies.
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> They knew China had raced ahead in sectors like batteries and "everything around energy," but seeing how big the gap was firsthand left them wondering how European and North American competitors can even survive, says Talia Rafaeli, a former investment banker at both Goldman Sachs and Barclays who's now a partner at Kompas VC. "Everyone needs to take this kind of trip," she said.
[1] https://finance.yahoo.com/news/china-road-trip-exposes-list-160000551.html
Problems (Score:5, Interesting)
I have an acquaintance heavily involved in manufacturing in the US. He has started, run, and acquired multiple factories. He puts the difference between the US and China this way.
The Chinese government determines that battery manufacturing is important to their overall industrial plan. Within a year to a year and a half, a dozen or so battery factories are opened.
In the US, if a company wants to open a battery factory, the permitting process alone takes a year, to up to two or three, depending on the location. He's had permits to reopen existing factories take two to three years to be approved.
Re: (Score:1)
This is why we're no longer able to build nuclear power plants in the US anymore. Meanwhile in China, they're bringing an average of 7 online ever year.
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> This is why we're no longer able to build nuclear power plants in the US anymore. Meanwhile in China, they're bringing an average of 7 online ever year.
Yikes, I didn't know they were bringing new reactors online that fast. In addition to permitting delays, almost every new nuclear project in the US also gets delayed through lawsuits. I don't really see a way around that here.
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IIRC just in April this year they approved construction of more nuclear plants than all of the US/EU combined since 1970 or so. Plus they're exporting more than they're building domestically, using newer technologies that because of our wonderful "free trade" mavens in DC we can't even buy if they were willing to sell it to us.
[1]https://kdwalmsley.substack.co... [substack.com]
China flips nuclear sanctions upside down
[1] https://kdwalmsley.substack.com/p/china-flips-nuclear-sanctions-upside
Re:Problems (Score:4, Insightful)
To be clear the 2 primary companies that design and built nuclear power in China are CGN and CNNC are both State-Owned-Enterprises. Same as in France with EDF and India with NPCIL. Those 3 nations have the bulk of current and future nuclear plants.
The US used to have far more Federal involvement with the Atomic Energy Commission and when that was disbanded we have seen a dropoff in plant construction.
Nuclear power and private investment don't really mix as history and results show. The risk factors and ROI are just not aligned.
If America wants to get serious about nuclear power again it's going to take Federal dollars and directives. Considering we seem antithetic to such a thing we will continue to see little of it.
Re:Problems (Score:5, Insightful)
That's about the only thing that such a centrally-managed setup gives, it forces a shift in the bureaucracy to make the oligarchy's mandate happen. The problem is that this may not account for things like environmental degradation, harm to the general population and other issues surrounding personal rights, etc.
Something of a compromise approach can be reached in democratic countries, but it requires all of the stakeholders from the federal officials down to the local building code inspectors during the construction process to be onboard.
What China does for 'the people' may well not be good for individual Chinese persons. Similarly to what the Soviet Union did for 'the people' was often quite harmful to individual persons.
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Or, it requires us to deregulate to an extent that whether it is "favored" or not, it simply doesn't take multiple years to get freakin' building permits.
This country is choking on regulation that discourages investment and makes a lot of stuff never get done because it's just a pain in the butt and takes forever to do regulatory approval for bog standard development or improvement.
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People need to remember why those piles of regulations were necessary in the first place: uncontrolled corporate greed lead to things like "killer fogs", the Cuyahoga River burning on national television, Thalidomide babies, mercury children, and manufacturers of tobacco and asbestos products consigning their workers and customers to horribly, painful, lingering deaths.
Carve out a limit and invest there (Score:2)
> this may not account for things like environmental degradation, harm to the general population and other issues surrounding personal rights, etc.
China's workers are de-facto slaves and their consumers are de-facto guinea pigs.
The article mentioned the "996" labor model, which while technically illegal, is given a blind eye by the gov't.
The Soviet Union quickly caught up in nuclear weapons just after WW2 by radiating everybody and their dog around factories and test grounds. They moved fast and broke peopl
Corrections (Score:1)
Re: "and put only half our eggs in the energy basket." -- should be "half our eggs in one energy basket".
And "Western-friendly companies" may also factor in location. For example, if war breaks out at Taiwan, getting supplies from Japan could be logistically difficult. Thus, we probably want a fair number of suppliers in the American, European, and/or African continents.
Outsourcing (Score:5, Insightful)
They thought they were outsourcing just production, but it turns out they have outsourced just about everything and have been left in the dust.
Re:Outsourcing (Score:5, Informative)
According to Pat McGee's book "Apple in China", Apple invested $275 billion dollars into upskilling Chinese labor between 2016 and 2021 while at the same time investing comparatively $0 (to three significant figures) in upskilling U.S. labor over the same time period. This shows that their plan and the plans of similar companies in China were about much more than just outsourcing production. This was not an "oops", it was a plan.
Drill, Baby, Drill! (Score:5, Insightful)
How's "Drill, baby, drill!" working out for us as a domestic and foreign, energy and economic policy?
Is all the anti-green economy non-sense going to be good for future generations?
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Overall pretty well. Petroleum prices are fairly stable, gas prices (refined product) haven't really moved in at least the last few months, natgas supplies are looking stable (prices are seasonal of course). We're still trying the hard sell to the EU to cut them off from Russian petroleum/natgas so we can replace those sales with our own exports. So, not too bad. For now. Once hot fusion hits the commercial market, it'll be a bloodbath. But that will take a few more years yet.
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Sure, if you ignore what has been talked about for nearly 20 years now, oil is great. No need to invest in any alternate energy production/manufacturing technology domestically. When oil is no longer king, we'll all just move to China.
Article is extremely misleading (Score:2)
There are two kinds of innovation - revolutionary and incremental.
You cannot gain an insurmountable advantage in revolutionary tech. You can only do so in incremental tech. Because nobody sees the revolutionary innovation coming.
The main topics they have discussed (solar, wind, batteries) have had consistent incremental advancement for decades.
They talked about the 'failure is our goal' strategy that China uses - and it is very successful. The US uses a similar system, though not to the same scale - in
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The financial industry is a good example of how paradigms are rapidly changing. Last year70% of international trade was conducted using the USD. Great, right? Five years before that it was 97%. Australia (among others) is now borrowing from China rather than the US because the rates and terms are so much better. The entire BRICS+ block, which includes all the major fossil fuel exporters but the US and Canada, is happily trading among themselves using national currencies rather than USD. Clients of Belt
Politician, Steal Thyself. (Score:2)
Since China has been overtly stealing intellectual property for the last 40 to 50 years it seems only logical that it's time for the entire world to start stealing intellectual property back from them. Also, China has more unemployed people than the United States has people, thereby presenting interesting long-term economic levers to be pulled when the time is right. And Mutual Assured Destruction is still Mutual Assured Destruction, so they need to remember that when they try to rename The Sea of Japan t
For now (Score:3, Insightful)
The more they modernize in China, the more expensive their labor will get (without some heavy handed pressure from the Chinese government). Will it be fast enough or significant enough to make domestic production viable without tariffs? Who knows...?
Re: For now (Score:5, Insightful)
That is literally not what this story is about. This is about China having technical superiority in a number of industries. This is an expected result of our allowing vulture capitalists to own everything, since they don't care about the future.
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> That is literally not what this story is about. This is about China having technical superiority in a number of industries. This is an expected result of our allowing vulture capitalists to own everything, since they don't care about the future.
You have to look at how this happened and project the future conditions. The rapid creation of new factories will slow as labor costs increase. Regulatory challenges and "operational" costs were factors in the failure of Northvolt AB. I honestly don't care much about the assessments of some VCs rolling around China and explaining their opinions. Their goal is never efficient production of quality products.
Re: For now (Score:5, Insightful)
This has nothing to do with VCs owning everything, and everything to do with the USA politicizing climate change.
Re: For now (Score:2)
Why do you think that climate change doesn't have political ramifications?
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Climate change has political ramifications. But that's not the problem at hand here.
Climate change poses big political questions: 1) Do we want this? 2) If not, do we want to do something about it? 3) Either way, who will pay for it?
"Politization" means that people try to answer 3) with "someone else than me" by either claiming question 1) does not exist at all, or answer 2) depending on their political affiliation, completely ignoring 3).
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if he means climate change has become a perfect smokescreen just like gender freedom, gay rights, inclusiveness, etc. to appease and distract the populace from the deep structural problems and degradation of our economic systems and institutions (hence people's lives and future), the rampant corruption, the rising inequality and wealth concentration, the increasing disregard of laws, the progressive encroachment on civil rights and freedom of expression and the reckless war escalations in a flight forward
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I think that you misunderstand the role of venture capitalists in this situation. Actually, that whole article largely misses the point. Allow me to try to explain
1) China has taxed its citizens and piled massive amounts of tax dollars into a few favored industries (solar, car manufacturing, etc).
2) Those industries have built up so much overcapacity that everyone is practically selling at a loss. Aka if I buy a Chinese EV, I'm probably paying less that the cost of building it. The difference is mad
Re: For now (Score:5, Insightful)
> 5) This situation can continue as long as China (or some other large country) is willing to impoverish it's own citizens in pursuit of dominance in a few select industries, or until other countries throw up trade barriers in response
China lifted 1B people out of poverty during ~1980-2015. They are the last country on Earth whom you can accuse of impoverishing their people. Their salaries are also 5x SEA average, life is cheap there, and they can actually even afford to buy real estate.
If you want an example of a country that is impoverishing it's people, it's the US. 2/3 of the country is one hospital visit away from being homeless, nobody can afford to buy a home anymore, and people work multiple shifts to get by. But yeah, let's point fingers at others...
What is going on in China is that their government can set goals, and achieve them. Unheard of, yes. Currently they are among others building up the renewables and car industries. The situation will continue until the industries have matured enough to make it on their own. This is standard industrial policy stuff. Keep your children safe, and teach them, and allow them to take age-appropriate risks and gain experience, unitl they are ready to go out on their own.
Overcapacity only looks like a problem if you look at it from a beancounter angle that has never seen a government that knew what it was doing. But if you view the whole lot as an education, research, and development system for bootstrapping a new industry fast, then this is exactly what you want. First, China has ultracompetitive markets in all sectors, so overcapacity is kinda their thing. Second, those who survive will be stronger on the world stage later. And third, the CCP has plenty of experience now scaling things up to get them going, and down as they mature. They will not break a sweat on this one, either.
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This is western Capitalists trying to blame the Chinese for the fact they sold us out.
The sad reality is that the west has stopped investing in new tech and innovation.
It started with outsourcing the manufacturing of non essential parts... that could be made at lower cost in Asia (aka more profit for the Capitalists).
As the Chinese learned how to do this with coaching and investment by those same western capitalists they figured out how they could do more complex things.
At this point the greedy western Capi
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The MIC has already figured out how badly they screwed up, since China is embargoing strategic minerals, mostly rare earths, bound for western weapons factories. As someone in another forum said, "They have no intentions of supplying the materials to build the missiles the Pentagon wants to launch at them." They're getting so desperate that they're shutting down production lines and delaying fulfillment of contracts by years. Boeing for example can't get materials to resupply Israel's "Iron Dome" interce
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It's not only about the MBA class and C suite doing. No country with basic brain function on the government level would have allowed this to happen. Instead offshoring was a bipartisan policy that was sold to the voters as the next big thing in american prosperity.
The Chinese were smart enough to understand that the offshore crowd was only in it for greed, they were wise enough to understand that it was a historic opportunity that was never going to happen again, and they were ballsy enough to demand, and
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No argument on your main point about China. China pulled a billion+ people out of abject poverty into the middle income category. No other single country has achieved anything even close. It's a historic achievement. So, I admit that I used the word "impoverished" inappropriately. Sorry about that.
China sets goals, and achieves them? Hm. I think there's more nuance there than you're willing to admit. Sometimes having government in complete control works out really well on some things. But not always. Th
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One child policy did work out, without it, they would have about 2.4B people now. In a country that is not exactly blessed with available farmland. The policy is not without it's problems, but problems smaller that what no policy would have had.
Great leap forward didn't work out. Lessons learned, painful ones. They are in fact studying all of the lessons extensively, lessons both of their own, and of others. In particular they are studying the lessons of the both the Soviet Union and the United States, and
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> ... and they can actually even afford to buy real estate.
It's not that the Chinese are investing in real estate because they can afford it, it is that there's few options allowed in China for investment than real estate. What this policy has done is created a real estate bubble where there's a lot of money put into what are supposed to be apartments for retirement and/or sell later at a profit but are often apartments that never get completed or are so cheaply built they are a death trap. There are brand new apartment complexes falling over because of a gentle
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> I think that you misunderstand the role of venture capitalists in this situation.
Some of us understand how it works, you simply aren't among them, which is weird because I can see from your comment that you have all the puzzle pieces.
VCs are selling out our future by being unwilling to invest in anything without short-term returns. That means fundamental R&D expenditures get cut, and mass layoffs happen every year. The best and brightest leave for greener pastures, and the technology stagnates.
> Along come the venture capitalists who look at the industry and say: well, there's no way I could possibly make 200% profit here, so I'm gonna call it *uninvestable*
How can you understand this and yet not understand what it causes to happen?
Re: For now (Score:4, Interesting)
Your views are compatible, and my view is that you're both correct. Venture capitalists, in common with many other capitalists, optimize for short-term profits, which can stifle long-term planning and innovation. State intervention is capable of making industries uncompetitive. I think that both have contributed to, for example, solar panels no longer being made either in Germany or the United States.
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Anyone who understands VCs knows not to touch them. If anyone takes their money, they're simply ignorant, and likely to fail in business anyways.
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China's occasional bouts of "overcapacity" are generally deliberate. Remember the empty "ghost towns" and railroad "stations to nowhere" covered in the western press a few years ago? The towns are now fully occupied and industries are growing around those stations. The current overcapacity of cars will lead to increased exportation of the surplus, and you're already seeing a flood of Chinese vehicles entering Latin America and Asia (markets abandoned by the US decades ago and by the EU more recently).
The
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In no way does China have technical superiority. I read the whole article, and have worked in China before; that is not at all the takeaway here.
There are two key takeaways. China currently has "capacity superiority". This is not technical superiority, this is production superiority. However it's clear they also have an enormous problem, evidenced by how it discusses the brutal price wars that go on in China. That speaks to a weak consumer market despite the capacity they built, so, as the article
Re: For now (Score:5, Informative)
> In no way does China have technical superiority.
China has technical superiority in a number of areas. Not across the board, but in enough things that we should care. Battery technology is the primary example. Solar panel technology, they may not lead the world, but they certainly lead the US. Manufacturing of small items, they are years out ahead of us, we gave that up, we can only cost effectively build large items now.
> the only reason they are the place to make these is because of slim margins and dumping practices
That's how they became the #1 place to make those things, which in turn is how they became #1 in technology to make those things. They copied their way to understanding the tech. That saved them a lot of time and money. Now they lead in several areas. Pretending otherwise is foolish. A lot of goods sold around the world are now not only manufactured in China, they are designed there as well. Corporations in other countries are buying complete goods, not just parts, and having their logos put on them.
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Add to the list:
Nuclear power plants
Energy grid
Transformers
Custom vehicles like fire trucks
Building
Large generator assemblies
Major project engineering
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> Nuclear power plants
I doubt China is ahead on nuclear power. Japan and Korea look to be doing better than what China can do in technological advancement and in the logistics to build a nuclear power plant quickly. China is building more nuclear power plants than the rest of the world combined but that doesn't mean they are necessarily ahead.
> Transformers
I thought the Allspark was destroyed in the Transformers battle over Chicago. Then the Seed taken to deep space after the battle outside Hong Kong. Did the Chinese find a source for tra
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It has nothing to do with technical superiority. It has everything to do with a small, select group of venture capitalists complaining that there are more solar/wind-friendly investment opportunities in China than there are in "the West".
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Much of this is a results of short-sighted bigotry from the ruling class. "If we don't allow them to buy the highest level chips they'll never catch up to us! All they know how to do is copy, they can't innovate! Brilliant!" So while they were patting themselves on the back China just built a chip industry from scratch, with home-grown lithography systems that are already equal to those which were cutting edge here just a few years ago.
I highly recommend KD Wamsley's Substack. He lives and works in Chi
Re:For now (Score:5, Insightful)
People are slowly waking up to the truth that this was never about labor costs . The Chinese government deliberately built up their industrial capacity because production becomes power over time. They used every trick in the book to become attractive to manufacturing. For a while, cheap labor was one of the tools they had, but Chinese labor hasn't been cheap for a long time now. Sometimes now it is even more expensive than American labor, but we still can't compete because we've lost those skills, that knowledge, those networks.
WW2 was over before it started because America had the industrial capacity to outbuild the rest of the world combined, in every category. WW3 will go exactly the same way for exactly the same reasons, but it this time it won't be America.
Re:For now (Score:5, Insightful)
The US is still the number 2 manufacturer on the planet. And we do it with far less distorting state control.
[1]https://en.wikipedia.org/wiki/... [wikipedia.org]
Regarding your other topic - WW3 is likely to play out quite differently than WW2. Things have changed a lot since 1940s. As just one example, the Ukraine conflict has shown that raw manufacturing power doesn't necessarily determine the outcome of a war. Plus, there's the whole nuclear aspect. There's a pretty good chance WW3 will last roughly 90 minutes, followed by several centuries of recovery time.
[1] https://en.wikipedia.org/wiki/Manufacturing
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The word "distortion" is doing a lot of work in the US political-economical discourse.
The questions one should ask is: can a government set goals for itself, and can it achieve them? Should it do so? The US answer is no and no, and most importantly - even to think of that is pure evil. But what is the point of the government then, if it doesn't bother to solve any problems the country has? And what is the point of the beautiful undistorted system, if all it produces is social problems and a falling standard
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Your point about 'academia' might have been valid five years ago, but that horse has left the barn. Foreign students have been the bread and butter of American universities, and they gouged them unmercifully for decades. Now the majority of the highest ranked technical schools are in China, and professors are leaving the US for that country as well.
[1]https://kdwalmsley.substack.co... [substack.com]
[1] https://kdwalmsley.substack.com/p/chinese-families-are-keeping-their
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Certain kinds of manufacturing, yes. Absolutely. And important ones too, such as heavy equipment and autos.
But it's the small, everyday, household, things that the west is completely dependent on imports for with near zero domestic capacity. And there's honestly little appetite (only talk and wringing of hands) to bring those kinds of manufacturing back either. When and if the tariffs fully kick in, maybe we'll see a change in attitude. But few Americans are interested in working on farms, let alone fa
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As a historian the only caveat I'd advise there is that we are unlikely to see a long, drawn-out slog like WW2 again. Production capacity is great but the next Great Power war isn't likely to take place over years or even months. So China's technological edge is likely to matter but it's tempered with a willingness to stockpile and maintain systems which may never see use.
Doing that at limited production scale is one thing. Doing it at massive, "we're going to fight a serious war with this stuff" scales
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> For a while, cheap labor was one of the tools they had, but Chinese labor hasn't been cheap for a long time now.
Yes, Chinese labor is still very cheap. India is cheaper, but to say that Chinese labor isn't cheap is just untrue. [1]China's vastly lower wages for manufacturing labor [apolloacademy.com] are a major advantage. From the link I included above "Manufacturing wages in China are now 20% of manufacturing wages in the US, and manufacturing wages in India are 3% of US wages,...." This is as of 2024.
[1] https://www.apolloacademy.com/us-wages-vs-wages-in-china-and-india/
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The more they modernize in China, the more expensive their labor will get
The country China is the global leader in industrial automation worldwide; Robotics and AI are among those areas they have an advantage. The cost of human labor may be getting more and more expensive, but they need less and less of it.
Furthermore in all likelihood the price of labor in the US HAS to decrease in order to compete. Therefore the rate of wages in the US may decrease due to them.
Re:For now (Score:4, Interesting)
The math is really simple. The one with the biggest factory wins. The more you manufacture, the more money you make, the more you learn, and the more you can do all that you want to do. All of this adds up to very real hard and soft power. It is now at a level where China has multiple shipyards building for the navy, where every one is building more ships at once than the whole US navy has in total, and the cost of that is basically a rounding error for them. Think for a second what that means for the balance of power in the world, once those ships hit the water.
China has the world's biggest manufacturing base, and 8 out of 10 top universities in the world. They are not only the biggest producer of industrial goods in the world, but also of science. And in both manufacturing and science they lead both in quantity all around and quality on the top end. They have also pretty much overtaken the neutral arbitrator role in international relations, while US has openly made itself the bully that goes around taking everyone's lunch money.
China has already gained tech lead in all but three key industries: chips, aerospace and biotech. And as we have been hearing, they are making progress in those fast. All the West had to do was not fuck up these three tech leads we had left. Instead we went and proved to China that we are not a reliable partner in these, so they went ahead and are speedrunning their own.
Now while Chinese salaries have raised to about 5x the average SEA salaries, they are still cheap compared to the West. And they are also going big into automation, diluting the labor cost of industry. And if that's not enough, their government is willing and able to manage the economy and money to solve any problems it has. The result is at any quality level their stuff is cheaper than what is available in the West. And their trade deals aren't half as predatory as what you can negotiate for in the West. The result is that for anything that you can get from China, there's not much reason to even think about the West.
This will soon enough add up to that the West will have no one to sell to. This is what the Orange Guy tarriffs game is about. Managing the decline. Carve the West into a separate from China trading block, so that there would be someone to sell to. As long as the US can keep Europe off of cheap energy from Russia, everyone will have no choice but to buy everything they need from the US. Never mind that this means cannibalizing the supposed "allies". A great power does not have friends, it only has interests. Those who have made themselves believe otherwise will be having the chickens come home to roost.
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> This will soon enough add up to that the West will have no one to sell to. .
Kind of puts a kink into project 2025's budding technocracy. We'll be the most insular country on the planet.
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And I blew all my mod points this morning. Damn.
One shipyard in China launched more tons of shipping last year than all US shipyards combined since WWII.
Re:For now... until the robots.. (Score:4, Interesting)
> The more they modernize in China, the more expensive their labor will get (without some heavy handed pressure from the Chinese government). Will it be fast enough or significant enough to make domestic production viable without tariffs? Who knows...?
That's the old economic model. Robots and AI eliminate the need for human workers. And China, with "dark factories," is ahead of the US in this innovation also. But almost any on-shoring of US manufacturing will use the same techniques. Our oligarchs do not want to hire people, if they can avoid it.
And robots do not require Artificial General Intelligence to be better than human workers. They work 24/7 and only need electricity, programming and maintenance.
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The Premise: Christian Nationalists, Fundamentalists, and Evangelicals are not followers of Christ's actual teachings.
This book is a toolbox that arms everyone else against their far less than accurate rhetoric.
The author John Fugelsang is [2]much better in a debate than Charlie Kirk ever was. [wordpress.com] It's too bad they'll never debate.
[1] https://www.litstack.com/separation-of-church-and-hate-john-fugelsang/
[2] https://phildynan.wordpress.com/2025/09/20/charlie-kirk-the-turning-point-predators/
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> That's the old economic model. Robots and AI eliminate the need for human workers. And China, with "dark factories," is ahead of the US in this innovation also. But almost any on-shoring of US manufacturing will use the same techniques. Our oligarchs do not want to hire people, if they can avoid it.
100%, although in raw numbers Chinese manufacturing jobs are still a major factor in their job market. Getting direct numbers of manufacturing jobs in China is much harder than it was a decade ago, but estimates are around there being 100 million more manufacturing jobs in China compared to the US. Not a great comparison based on the overall population of each country, but still telling. The wage gap between China and Western countries for manufacturing jobs is still massive. (Chinese workers earn about 20%
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I made this prediction 20 years ago, back when China started obviously making inroads into technology beyond just manufacturing. I have been waiting 20 years already for the cost of labor to equalize, might have to wait another 20 to 50 years before it actually happens.
So you're not wrong, but don't hold your breath waiting for it to happen any time soon.