The Gift of Fire
China's giddy ascent to superpower rival of the US is one of five-year plans, wholesale IP theft and vast spy rings—in the pursuit of profits, Apple just handed it all over
Apple in China: The Capture of the World’s Greatest Company
Patrick McGee
ASIN: B0DJK2D88B
Publisher: Scribner
Publication date: May 13, 2025
Print length: 448 pages
IN APRIL 2016, Apple CEO Tim Cook and two senior Apple executives met with senior government officials at Zhongnanhai, the Chinese Communist Party’s secretive leadership compound in Beijing. Xi’s rise to the leadership of all China marked a walking back from the “open-and-reform” Deng Xiaoping era and his administration was alert to the slightest whiff of Western companies overly profiting from business in China.
One firm appeared to be doing just that more than any other. The time had come to give an account of Apple’s global success as a massively scaled business that manufactured everything in China.
Was Apple, as Beijing’s hardliners suspected and as Patrick McGee, in his book Apple in China, puts it, an “exploitative trading company that offered nothing in return,” or, was it, as Apple executives were about to spin the story, “a mass enabler of ‘indigenous innovation’.”
The irony of the spin—and the fact it worked—is that the Apple executives were finally telling a truth they themselves had never acknowledged. One might even take the subtitle of Apple in China—”The Capture of the World’s Greatest Company”–and reframe it as “How the World’s No 1 Company Enabled the Rise of America’s No 1 Strategic Competitor.”
As McGee writes:
Apple’s own balance sheet tells the story: The value of its ‘machinery, equipment and internal-use software’—namely the instruments placed in third-party factories for production—totaled less than $2 billion in 2009, but then soared beyond $44.5 billion by 2016—more than four times the value of all “land and buildings” owned by Apple—as the company took unprecedented control of its supplier network.
The Apple executives left the Beijing hawks with an initially unreported memorandum of understanding (MOU) with the National Development and Reform Commission that committed Apple to supporting some key Chinese projects and to invest a massive $275 billion into China over the following five years. Ironically, it wasn’t even “a concession on Apple’s part. It was just the $55 billion the company estimated it’d invested for 2015, multiplied by five years.”
In current US dollar terms, the amount of money Apple was investing into China was more than twice that provided by the Marshall Plan to rebuild post-WWII Europe ($131 billion). At the time, the chief administrator of the plan had called it “the most generous act of any people, anytime, anywhere, to another people."
McGee states his case early in Apple in China: “Apple wouldn’t be Apple today without China,” he writes, before adding the book’s real whammy blow: “What this book contends is more intriguing—that China wouldn’t be China today without Apple.
Exactly what Apple’s trio of top executives told Beijing leadership that day isn’t known. But what they were directly signaling to Beijing was that Apple wasn’t just creating millions of jobs in the country; it supported entire industries by facilitating an epic transfer of “tacit knowledge”—hard-to-define but practical know-how “in the art of making things, in organizing practical matters, and in the way people produce, distribute, travel, communicate, and consume,” as the China-born Federal Reserve economist Yi Wen defines it. For Yi, it was the acquisition of this tacit knowledge, rather than democracy or property rights, that acted as “the secret recipe” behind England’s Industrial Revolution in the eighteenth century, as well as China’s over the past four decades.
The author tells the Apple story—it takes some 90 pages of well-trodden “Apple rises from the ashes, Jobs returns” narrative to get to the “in China” part—complete with New Yorker-style intros to department heads and legal hands who disappear from the narrative pages later. Given the importance of the book’s central message—China wouldn’t be China without Apple—it seems a waste to let it be subsumed under the weight of Apple’s “in the beginnings” storyline arc. On the other hand, it sets the stage for exactly what the consumer giant walks into despite its Californian "Think Different” corporate culture.
There’s also the question of PRC agency. Was Apple “captured” as the subtitle suggests, or did Apple fall into Beijing’s hands while neither the party nor Apple were really watching?
China brilliantly played its long-term interests against Apple’s short-term needs. In 1999, none of Apple’s products were made in mainland China; by 2009, virtually all were. This rapid consolidation reflects a transfer of technology and know-how so consequential as to constitute a geopolitical event, like the fall of the Berlin Wall—but it’s an event that played out over many years, hidden by the twin threats of strict nondisclosure agreements and a censored media landscape where all the action was.
The problem with passages such as this is that in McGee’s own telling, even when the Apple execs have to face up to the fact that they’re under scrutiny at the very highest levels of PRC government for not taking the tried and trusted joint-venture approach to China, when they fess up to just how much money they’re throwing at China’s technological catchup with the West, it has every appearance of being a revelation to everyone except those who are not paying attention. And on the latter, that’s almost everyone.
A line-by-line reading of McGee’s book suggests that Apple walked into its “capture” and the upper echelons of Chinese leadership were not completely getting the picture until notoriously secretive Apple explained it.
It was becoming clear Xi would welcome foreign corporations only if they were “in China, for China”—and if they didn’t like it, they could leave.
That’s the atmosphere in which Apple finally shows its hand—and reality is something that no rising nation state with grievances could say no to.
The CHIPS and Science Act, which is designed to stimulate computer chip fabrication in America, will cost the US government $52 billion over four years—$3 billion shy of what Apple invested annually in China nearly a decade earlier. Let me underscore this point: Apple’s investments in China, every year for the past decade, are at least quadruple the amount the US commerce secretary considered a once-in-a-generation investment.”
To summarize, Apple in China’s central revelation is that Apple's manufacturing relationship with China constituted one of the largest technology transfers in modern history, comparable to geopolitical events like the fall of the Berlin Wall but hidden from view by NDAs and media restrictions. Between 1999 and 2009, Apple shifted from making no products in mainland China to manufacturing virtually everything there. This wasn't just outsourcing—it was systematic knowledge transfer that would reshape global technology competition.
Apple's unique manufacturing challenge producing—as McGee puts it when describing Apple’s qualitative demands—"10 million Ferraris a year" with luxury precision at mass-market scale forced unprecedented collaboration with Chinese suppliers.
The “Apple Squeeze”—a term coined by the author—saw Chinese companies accept soul-crushingly low margins (2-7% versus Apple’s 33%) in exchange for invaluable training from Apple's best engineers, who literally slept on factory floors for months teaching advanced manufacturing processes. This created a superior form of technology transfer that Beijing would have recognized as more effective than traditional espionage or forced joint ventures.
What made this historically unprecedented was that Apple inadvertently played Prometheus, freely handing over the “gift of fire” that China had spent decades trying to acquire through spying, theft, and coercive tactics. Apple’s engineers enthusiastically transferred not just technical specifications but “tacit knowledge”—the practical, experiential know-how that had taken the West centuries to develop and that cannot be learned from textbooks.
Ironically, in this way, Apple inadvertently gives birth to the Chinese smartphone industry. Armed with Apple-taught capabilities, Chinese suppliers enabled domestic brands like Huawei, Xiaomi, and Oppo to grow from 10% market share in 2009 to 74% by 2014. The iPhone didn't kill Nokia—Chinese companies using Apple’s own manufacturing knowledge did. Apple's $275 billion “investment pledge” in 2016 wasn't even new spending—simply existing operations that already exceeded the Marshall Plan.
Meanwhile, Chinese suppliers in Apple's ecosystem grew from 16 in 2012 to 51 by 2021, overtaking both American and Taiwanese suppliers. Apple sleepwalked into complete dependence on a supply chain they no longer controlled, making their “Made Everywhere” marketing slogan increasingly disconnected from a reality of accelerating Chinese dominance.
The result is a technology transfer that makes Apple the biggest corporate supporter of “Made in China 2025,” Beijing's explicitly anti-Western plan to eliminate dependence on foreign technology. Two dominant feel-good narratives—Apple’s rise and China’s economic miracle—stood in the way of recognition that they were the same story, with profound consequences for global technological leadership.
It’s a context in which it’s tempting to go tabloid and take a cheap shot at the progression: Apple teaches China advanced manufacturing, China achieves self-sufficiency in critical technologies, China no longer needs Western partners, Xi pursues “ultimate demise of capitalism.”
Apple thought they were optimizing their business; they were actually undermining the entire economic system.
In McGee’s magisterial telling, Apple in China—inevitably, given everything that precedes it—ends on a future-trap dark note.
Despite Apple executives' attempts to reassure their board about the possibilities of diversification from China, writes McGee, insiders call these presentations a “con job.”
Apple has sleepwalked into a relationship that "could blow up at any time" with a strategic competitor whose ultimate objectives are fundamentally incompatible with Apple’s survival. An insider tells McGee, “There’s no way that they could diversify from China in any meaningful way within the next five years. It’s just impossible.”