Let’s axiomatically presume that vertical integration (of your supply chain, manufacturing, software development, labor force, etc.) is the key to “innovation” in the abstract. You can see this starting to happen with BYD, the Chinese electric car company, for example.

With the above in mind, let’s say your goal as a country is to develop your industries so you can achieve broad vertical integration.

Soft economic assets (financial markets, legal structures, software, pharma, IP, etc.) are easier to bootstrap once you have hard economic assets assets (commodities, energy, manufacturing, transportation, logistics, etc.). If you lose your hard economic assets and only have soft ones, you are at a strategic disadvantage because your opponent (in this case China), can bootstrap their soft assets relatively quickly. By comparison, it will take you much longer to get your hard assets back (through the mythical process of “reshoring/reindustrialization”).

More in my comment here: https://news.ycombinator.com/item?id=43589566.