An advisor successfully advocated for opening China's EV market to startups. His proposals carried weight due to a personal friendship with then-leader Hu Jintao, a connection forged decades earlier when they were members of the same university dancing troupe.

The city of Hefei's government saved the struggling EV startup NIO with a $1 billion equity investment. It later sold its stake for a 3-4x return, creating the "Hefei Model." This success spurred a nationwide trend of local governments acting as venture capitalists, fueling massive investment and overcapacity.

Unlike the U.S. government's recent strategy of backing single "champions" like Intel, China's successful industrial policy in sectors like EVs involves funding numerous competing companies. This state-fostered domestic competition is a key driver of their rapid innovation and market dominance.

The city of Wuhu, frustrated by the arrogance of state-owned auto giant FAW, used windfall funds to independently buy an engine assembly line from the UK. This allowed them to launch their own car company, Chery, completely bypassing the established SOE system.

Uber's CEO argues China's EV dominance is a product of a unique hybrid model. The government sets a top-down strategic goal, but then over 100 domestic companies engage in "brutal," bottoms-up competition. The winners, like BYD, emerge battle-tested and highly innovative.

Contrary to the popular narrative of a monolithic, state-led effort, much of China's technological acquisition was driven by a bottom-up rush. Individual private and state-owned enterprises acted in their own self-interest, proactively seeking out and investing in foreign innovation to bring back home, independent of a central directive.

China's government sets top-down priorities like dominating EVs. This directive then cascades to provinces and prefectures, which act as hundreds of competing, state-backed venture capital funds, allocating capital and talent to achieve the national strategic goal in a decentralized but aligned way.

Contrary to the view of a monolithic state, China's economic strength comes from intense competition between its provinces. This hyper-local market forces companies to become incredibly resilient, and only the strongest, like BYD, survive to dominate globally.

Contrary to the Western perception of a monolithic state-run system, China fosters intense competition among its provinces. Provincial leaders are incentivized to outperform each other, leading to massive, parallel innovation in industries like EVs and solar, creating a brutally efficient ecosystem.