Building things and breaking things in China (Summer School World Tour)

**SPEAKER_1** (0:01)
This is Planet Money from NPR.

**Robert Smith** (0:06)
The world is filled with big economic ideas that could help us live better here in the United States. So this summer, we've decided to collect them all.
Willkommen and bienvenue to Planet Money Summer School World Tour, the only international educational experience that doesn't have a carry-on weight limit. Bring the extra shoes. All summer long, we are traveling through the seven continents and looking for economic lessons that can help us understand the place we call home. There are hundreds of ways to create jobs, keep prices low and make us all richer, or screw up a perfectly good economy. Let's learn from them. Today's journey? China and the perils of an engineering economy.
I'm Robert Smith.
No country on earth has seen the kind of economic growth that China has over the last 50 years. China has become the factory to the world, a grand experiment in central government planning and personal ambition. Along the way, China has created enormous wealth and pulled 800 million people out of extreme poverty. It has been a wild trip. In 2012, Planet Money traveled to China to marvel at the progress.

**SPEAKER_4** (1:36)
Ladies and gentlemen, this is not just any train, this is part of China's new bullet train network, the largest in the world. It tops out at over 300 kilometers per hour. That's 200 miles an hour. It makes Amtrak look primitive.

**Robert Smith** (1:49)
Of course, now China is a rich country facing rich country problems. Bubbles bursting, young people resentful, and we can learn a lot from China about how to handle the despairs of success.
And our guest professor today says we should pay attention because our two countries have the same economic soul.

**Dan Wang** (2:08)
Americans are crazy.
Chinese are crazy. These are two countries full of these crazy hustlers.

**Robert Smith** (2:15)
Dan Wong is a fellow at Stanford University's Hoover Institution and the author of Breakneck, China's Quest to Engineer the Future.

**Dan Wang** (2:22)
That's no accident that the future is being invented in Shenzhen and in Silicon Valley and through Wall Street as well as Beijing. I think that more countries around the world need to appreciate this crazy household energy that both the US and China have.

**Robert Smith** (2:36)
Dan, we consider you the perfect person to be our guest professor today. You were born in China. You've lived in both China and the US and in Canada, I should say, and you're about to travel back to China now.
You've developed this fascinating theory about how China grew so fast and why that's creating problems now. What is the theory?

**Dan Wang** (2:58)
China is a country I call the engineering state because at various points in the recent past, the entirety of the senior leadership have had degrees in engineering. What do engineers like to do? They like to build, build, build, whether that is a hydraulic dam or a coal plant or solar wind, nuclear, a lot of homes, roads, bridges, high-speed rail everywhere.
They can also be awfully literal minded at treating society as if it were just another building material.

**Robert Smith** (3:28)
I love this idea of the engineering state, that every problem is solvable with enough money, manpower or duct tape. It isn't just a metaphor, I should say. In your book, you talk about how the people in charge of the government have actual engineering degrees, chemical engineering degrees, mechanical engineering.

**Dan Wang** (3:47)
Hydraulic engineering and the prior general secretary built a dam. The present general secretary had his undergraduate in chemical engineering. And these are people who sort of treat a society as if it were just another hydraulic flow to be shifted around and blocked and rechanneled as they wish.

**Robert Smith** (4:06)
I should say Dan Wong is going to be our guide on today's show. And in his book, he pointed out that the United States has more of a lawyer culture than an engineering culture. Most US politicians couldn't build a dam, but they would know how to use the law to slow things down. So China builds the high-speed trains, the US goes to court for years over where the tracks should go. That's the difference.
Today we will have two case studies about the perils of the Chinese engineering state, and Dan will return with lessons we can take from it. It's easy to get jealous of all the growth in China, but every boom has a bust growing inside of it. Rapid economic growth can lead to more debt, more risk, and more chaos. It's a cautionary tale ahead after the break.

**SPEAKER_6** (4:54)
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