The Joker to Our Batman

Over the weekend, I showed my kids a modern classic: The Dark Knight Rises (2008).

Remember the scene where Batman interrogates the Joker?

Batman gruffly demands to know, “why do you want to kill me?”

The madman replies, “I don’t want to kill you! What would I do without you? Go back to ripping off mob dealers? No, no, NO! No. You… you… complete me.”

Something clicked in my mind, and the dialogue reminded me of our relationship with China.

The Joker craves a worthy adversary, because he realizes it brings out the best in both of them. Steel sharpens steel.

So yes, China’s growing industrial power is a threat to our economy.

But without them, who would give us the motivation to push forward? To make technological breakthroughs?

Not Europe, that’s for sure. Innovation is on life support in the EU.

Japan is past its prime. South America? No, they’re more of a resource-based economy. Canada? Mexico? No, no.

China is our prime competitor for the foreseeable future. And if we play it right, both countries can benefit from this rivalry. Yes, there will be some pain and adjustment.

But capable adversaries bring out the best in people. And in a tight spot, nobody is more dynamic than Americans.

Fruits of the Space Race

Beep… Beep… Beep…

On October 4th, 1957, the Soviets launched the world’s first satellite into orbit. Sputnik shocked the world.

Americans wondered, how the heck did the commies beat us to space?

The U.S. government didn’t waste time. Within a year, it had:

• Created NASA
• Created ARPA, which became DARPA
• Increased engineering and science programs
• Expanded scientific research and education
• Increased government spending and grants for space and industrial research
• Expanded early computer research

The government’s rapid reforms helped us catch up and then surpass the Soviets in space tech.

And the research which started after Sputnik led to incredible breakthroughs like the Apollo Guidance Computer, which was among the first to use integrated circuits. This helped pave the way for the modern electronics age (for better or worse).

The idea that the Soviets were outcompeting us lit a fire underneath the entire country. Government, corporations, and people. All working together to ensure we don’t fall behind.

Intense rivalry is absolutely critical to these types of breakthroughs. We saw it in World War II as well, of course. The British would never have created the first radar network without the threat of German bombers overhead. Turing never would have had the funding or motivation to create early computers, if not for the fact that we really needed to crack the Germans’ Enigma encryption machine.

Of course, I do NOT think we’re going to go to war with China in a kinetic sense. This will stay a purely technological race. Mostly because we’re both armed with nuclear ICBMs (a product of the space race, ironically).

It will be difficult. But if we play it right, there will be truly miraculous, and disturbing, technological breakthroughs going forward. All driven by a fierce competitive spirit.

The AI Race, Too

OpenAI released its first public version of ChatGPT on November 30th, 2022. We’re less than 4 years into this madness.

And the competition with China is heating up. For a long time, Chinese AI models couldn’t compete with America’s.

But in the past year, this has changed. Chinese AI now offers genuine competition to our best.

The rivalry is keeping the big American AI leaders on their toes. We’ve seen a consistent pattern. An American AI leader, usually either OpenAI or Anthropic, will release a new breakthrough model.

China will soon release an AI model 95% as good, but for a much lower cost. Rinse and repeat.

This cycle is what’s driving the huge gains we’re seeing in AI today. And it’s not just software, it’s hardware too. Servers, GPUs, network infrastructure.

For a long time, Nvidia was really the only game in town for building and running modern AI models. But AMD, another American firm, has stepped up its game.

And in China, there’s a hardware renaissance happening. We cut them off from Nvidia’s best AI hardware, so they had no choice but to build their own domestic alternatives.

Now Nvidia is feeling major competitive pressure, particularly from China. So they’re pushing hard to make new breakthroughs. And succeeding.

My point is that we need to use China’s tech progress as motivation to keep our foot on the gas.

And it goes far beyond AI and manufacturing. Pharmaceuticals, R&D, nuclear energy, space tech, and much more. China is challenging us in all these areas.

Having a strong competitor will drive both sides to innovate.

With this rivalry, technology and medicine are set to leap forward in unpredictable and disruptive ways. At times it’s going to be overwhelming, even frightening.

But ultimately, steel sharpens steel. We need a capable adversary to really push the needle. China fits the bill.

Now let’s make sure we win this upcoming phase. In June, I laid out the steps we must take in How We Can Win vs China.