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> The Wassenaar Arrangement bans the export of many high end equipments necessary for chip making to China. While all the other countries/regions can specialize

> The Wassenaar Arrangement bans the export of many high end equipments necessary for chip making to China. While all the other countries/regions can specialize in one part of the semiconductor industry, China has to do all of them by itself, since it has no external help. Forcing your enemy to invest heavily in such key sectors is pretty stupid. Eventually, one way or another, Chinese will master the state-of-the-art. A few good examples here - LCD industry, weapons. It also worth pointing out that the existence of the Wassenaar Arrangement relies solely on the fact that the US is the biggest economic and military power in the world. Not sure how long the US can continue to maintain it.

npunt 8y ago
Not sure its a guarantee that China will master the state-of-the-art of every important sector. China is aging at a very fast pace [1] as their workers are getting older and not being replaced (the tornado chart is pretty stark). This is going to slow the economy considerably. Given other more developed countries have a technology advantage that they're not sharing and they do not face a demographic crunch, its possible China will find themselves perpetually behind in many areas. [1] https://chinapower.csis.org/aging-problem/ https://chinapower.csis.org/aging-problem/
- baybal2 8y ago
  >Not sure its a guarantee that China will master the state-of-the-art of every important sector. No, they don't need to to begin with. They are smart enough to not to parrot late USSR. Instead, it is seems more evident with each day that they use counterstrategy - sealing West's advancements in what will be the stem of state-of-the-art tech tomorrow, for cheap, instead of fighting for already substantial, but heading for decline things-that-matter markets.
  - netheril96 8y ago
    > Instead, it is seems more evident with each day that they use counterstrategy - sealing West's advancements in what will be the stem of state-of-the-art tech tomorrow, for cheap, instead of fighting for already substantial, but heading for decline things-that-matter markets. That used to be a working strategy. But now that ZTE was sanctioned by the US and almost crumbled overnight, it is obvious that the United States is capable and willing to throttle China on these "already substantial, but heading for decline things-that-matter markets". So China has no choice but to master the state-of-the-art of every important sector.
    - dis-sys 8y ago
      > it is obvious that the United States is capable and willing to throttle China on these "already substantial, but heading for decline things-that-matter markets" that is not very smart. the ZTE drama is a wake up call for Chinese, the message is loud and clear - US products are not reliable in term of its supply, it can be cut at any time for some stupid political reasons ordered by a moronic US president like Trump. if you look at the whole story, it is push the lower limit of the business IQ - - forcing your competitor to invest in high profit sectors - telling your customers to rely on less American products by convincing them that the supply won't be reliable US deserves a better president.
      - rmk 8y ago
        Perhaps you have missed some facts. ZTE repeatedly (> 100 times) violated the terms of a court ordered probation, intentionally gave misleading information, despite being levied a > 1B fine (the original reason for sanctions: sending some US-origin items to Iran, obstructing justice, and making a material false statement). The Government decided to go this route after they realised that the sanctions route did not lead to the right behaviour. This would have been pretty uncontroversial under any other President. Read this for more detail on ZTE's malfeasance: https://www.justice.gov/opa/pr/zte-corporation-agrees-plead-guilty-and-pay-over-4304-million-violating-us-sanctions-sending https://www.justice.gov/opa/pr/zte-corporation-agrees-plead-...
foodislove 8y ago
Or they throw money into sectors that they can't win thereby depleting resources away from areas they can. It can seem the Chinese are advancing in every field, but their unfavorable demographics and inability to attract overseas talent will eventually catch up.
SkyMarshal 8y ago
>Forcing your enemy to invest heavily in such key sectors is pretty stupid. Generally this makes sense, but not in China’s case where they require all foreign ventures to team with a Chinese company who then steals the foreign partner’s IP. No way a Western semiconductor company could set up a fab in China without creating a competitor 5-10yrs later using their own IP against them. Thus the Wassenaar Arrangement makes sense, it prevents any Western semiconductor company from gaining a short term advantage over its competitors by leveraging Chinese cost efficiencies, incentivizing all of them to self-destructively follow suit.
- netheril96 8y ago
  The Wassenaar Arrangement bans the export of products, not the joint ventures, although I guess the latter are implicitly not allowed. It would be safe for Western companies to sell made products to China if not for the political reasons, since China could not copy the product itself.
- sangnoir 8y ago
  > Generally this makes sense, but not in China’s case where they require all foreign ventures to team with a Chinese company who then steals the foreign partner’s IP China is also capable of figuring things out from first principles, or espionage from non-partners. An example of this was the decision by the US to exclude China from the ISS - they built a couple on their own (no partners) and will be there after the ISS de-orbits or privatizes.
Slansitartop 8y ago
> Forcing your enemy to invest heavily in such key sectors is pretty stupid. Eventually, one way or another, Chinese will master the state-of-the-art. A few good examples here - LCD industry, weapons. Not if your enemy has a habit of reverse engineering and copying everything they buy. I recall that China was has a competition for foreign companies to sell them attack helicopters. They had trials and evaluations, and settled on a South African one. You'd assume they made a big order, right? Wrong. They placed an order for a single copy, which the South African company wisely declined. I can't seem to find a source for the above story, but I think I read it in Wired maybe 5-10 years ago.

npunt 8y ago

Not sure its a guarantee that China will master the state-of-the-art of every important sector. China is aging at a very fast pace [1] as their workers are getting older and not being replaced (the tornado chart is pretty stark). This is going to slow the economy considerably. Given other more developed countries have a technology advantage that they're not sharing and they do not face a demographic crunch, its possible China will find themselves perpetually behind in many areas. [1] https://chinapower.csis.org/aging-problem/ https://chinapower.csis.org/aging-problem/

baybal2 8y ago
>Not sure its a guarantee that China will master the state-of-the-art of every important sector. No, they don't need to to begin with. They are smart enough to not to parrot late USSR. Instead, it is seems more evident with each day that they use counterstrategy - sealing West's advancements in what will be the stem of state-of-the-art tech tomorrow, for cheap, instead of fighting for already substantial, but heading for decline things-that-matter markets.
- netheril96 8y ago
  > Instead, it is seems more evident with each day that they use counterstrategy - sealing West's advancements in what will be the stem of state-of-the-art tech tomorrow, for cheap, instead of fighting for already substantial, but heading for decline things-that-matter markets. That used to be a working strategy. But now that ZTE was sanctioned by the US and almost crumbled overnight, it is obvious that the United States is capable and willing to throttle China on these "already substantial, but heading for decline things-that-matter markets". So China has no choice but to master the state-of-the-art of every important sector.
  - dis-sys 8y ago
    > it is obvious that the United States is capable and willing to throttle China on these "already substantial, but heading for decline things-that-matter markets" that is not very smart. the ZTE drama is a wake up call for Chinese, the message is loud and clear - US products are not reliable in term of its supply, it can be cut at any time for some stupid political reasons ordered by a moronic US president like Trump. if you look at the whole story, it is push the lower limit of the business IQ - - forcing your competitor to invest in high profit sectors - telling your customers to rely on less American products by convincing them that the supply won't be reliable US deserves a better president.
    - rmk 8y ago
      Perhaps you have missed some facts. ZTE repeatedly (> 100 times) violated the terms of a court ordered probation, intentionally gave misleading information, despite being levied a > 1B fine (the original reason for sanctions: sending some US-origin items to Iran, obstructing justice, and making a material false statement). The Government decided to go this route after they realised that the sanctions route did not lead to the right behaviour. This would have been pretty uncontroversial under any other President. Read this for more detail on ZTE's malfeasance: https://www.justice.gov/opa/pr/zte-corporation-agrees-plead-guilty-and-pay-over-4304-million-violating-us-sanctions-sending https://www.justice.gov/opa/pr/zte-corporation-agrees-plead-...

foodislove 8y ago

Or they throw money into sectors that they can't win thereby depleting resources away from areas they can. It can seem the Chinese are advancing in every field, but their unfavorable demographics and inability to attract overseas talent will eventually catch up.

SkyMarshal 8y ago

>Forcing your enemy to invest heavily in such key sectors is pretty stupid. Generally this makes sense, but not in China’s case where they require all foreign ventures to team with a Chinese company who then steals the foreign partner’s IP. No way a Western semiconductor company could set up a fab in China without creating a competitor 5-10yrs later using their own IP against them. Thus the Wassenaar Arrangement makes sense, it prevents any Western semiconductor company from gaining a short term advantage over its competitors by leveraging Chinese cost efficiencies, incentivizing all of them to self-destructively follow suit.

netheril96 8y ago
The Wassenaar Arrangement bans the export of products, not the joint ventures, although I guess the latter are implicitly not allowed. It would be safe for Western companies to sell made products to China if not for the political reasons, since China could not copy the product itself.
sangnoir 8y ago
> Generally this makes sense, but not in China’s case where they require all foreign ventures to team with a Chinese company who then steals the foreign partner’s IP China is also capable of figuring things out from first principles, or espionage from non-partners. An example of this was the decision by the US to exclude China from the ISS - they built a couple on their own (no partners) and will be there after the ISS de-orbits or privatizes.

Slansitartop 8y ago

> Forcing your enemy to invest heavily in such key sectors is pretty stupid. Eventually, one way or another, Chinese will master the state-of-the-art. A few good examples here - LCD industry, weapons. Not if your enemy has a habit of reverse engineering and copying everything they buy. I recall that China was has a competition for foreign companies to sell them attack helicopters. They had trials and evaluations, and settled on a South African one. You'd assume they made a big order, right? Wrong. They placed an order for a single copy, which the South African company wisely declined. I can't seem to find a source for the above story, but I think I read it in Wired maybe 5-10 years ago.