There’s hardly a better bellwether of Silicon Valley venture capital (VC) than Andreesen Horowitz (a16z). For a highly influential VC firm that has long believed software is the future—its motto is “software is eating the world”—a16z raised eyebrows when it launched the “American Dynamism” portfolio in 2022. It would serve as a new vehicle for a16z to pursue investments in foundational and frontier hard tech that align with US national interest. That technology and national interest are becoming increasingly intertwined is not a surprise, given what has transpired over the last few years betwe ..read more

While China is seeing a private sector frenzy in hydrogen electrolyzer production and fuel-cell electric vehicles (FCEVs), it’s all quiet on the midstream infrastructure front. That is, compared to the 2,600 km of hydrogen pipelines in operation in the United States and 2,000 km in Europe, China has merely 100 km in operation. The deficiency of pipeline infrastructure will be a serious bottleneck for the hydrogen industry. Like most natural resources in China, hydrogen production is concentrated in the Western hinterlands, while the demand center will be along the coast (see Figure 1). And the ..read more

Leaders in Chinese government and education have long known that tangible progress in artificial intelligence (AI) rests on the potential of the real human intelligence behind it. First and foremost, China wants a robust AI talent pool, and the cultivation of that talent is rooted in its colleges and universities. That’s why China’s top university administrators, along with the Ministry of Education (MOE), have been calling for more AI programs to be built nationwide. Following suit, Chinese universities have launched more than 2,300 undergraduate AI major programs, including 350 at China’s el ..read more

As the Chinese economy sputters, debate around China’s massive surplus has heated up again. Alarmists argue that with investment down and consumer demand lackluster, Beijing has little choice but to resort to export-led growth, flooding the world with Chinese goods. But their fear of China running ever larger current account surpluses is likely misplaced. While it’s true that China registered some of its biggest trade surpluses in recent years, that was likely a one-time, pandemic effect on which China capitalized to expand exports. We believe that rather than continuing indefinitely, China’s ..read more

For all the talk of China’s aggressive industrial policy, it is remarkably muted in the green hydrogen industry. In a twist of irony, it’s the United States and Germany that are aiming to propel their green hydrogen industries with hefty federal investments and subsidies.  To wit, the Biden administration just announced a $7 billion investment in seven regional hydrogen hubs to jumpstart commercialization of “clean hydrogen.” This comes on top of a significant decade-long subsidy in the Inflation Reduction Act for clean hydrogen manufacturers. Germany, too, has poured federal funding into ..read more

Beyond money and talent, there’s an underlying tension that could hamper China’s technology pivot: the misalignment of interests between the state and the private sector. That misalignment can be aptly characterized as the state’s desire to invent the future and the private sector’s focus on scaling the here and now. From batteries and solar panels to legacy chips and machinery, China’s private sector has excelled at executing the “digest then tweak” strategy. They deploy what already exists, scale aggressively, then rapidly iterate and innovate based on local market conditions and competition ..read more

When it comes to clean energy, hydrogen has commanded considerable attention lately. Not only is hydrogen one of the most abundant elements on earth, it is also a potential zero emissions natural gas with wide applications from transport to industrial. Indeed, many net zero energy transition models include “green hydrogen” in their projections. Yet currently “gray hydrogen” produced from fossil fuels dominates the market because green hydrogen is 3-6x more expensive than gray hydrogen and 6-8x more expensive than methane-based natural gas. For green hydrogen to reach true commercial viability ..read more

When we first launched “Supply Chain Jigsaw” in 2019 that identified the lithium-ion battery as one of three crucial products for the global economy, few knew what NCM or LFP meant. Today, the battery has indeed become synonymous with the future of transport. For all the attention lavished on the battery and China’s dominant role in it, the electric vehicle (EV) industry requires an extensive supply chain that goes beyond China. Auto incumbents, hampered by spectacular success in the traditional auto industry, have found pivoting to electrification more challenging. Repurposing assets tied up ..read more

More than knowledge or money, talent is the crux that will determine China’s technological progress. That’s because knowledge today is relatively evenly distributed and easy to access. Capital, too, is abundant and largely globalized. Talent, however, is unevenly distributed and much harder to cultivate. China’s talent challenge will intensify as it grapples with a technology pivot from bits to atoms, which requires an attendant shift in the STEM talent pipeline. In particular, forging world-class materials scientists will be key. In the world of atoms, coders matter less than chemists. Whethe ..read more

Beijing has long been dogged by the “ruler is far away” problem. In practice, it produced a model of “federalism, Chinese style” that induced hyper-competition, usually accompanied by a large helping of local protectionism, to facilitate rapid growth for decades. Now times are a-changing. In this new era of “centralism, Xi style,” provinces need to do the center’s bidding of ensuring economic security. In other words, Beijing wants to reset the 不听话 (“intransigent”) approach that provinces adopted with gusto during the growth imperative era to one where localities are more inclined to 听话 (“foll ..read more