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While there couldn't be a better case than ZTE for the Chinese government to muster domestic support for its "Made in China 2025" policy, the Sputnik analogy is

While there couldn't be a better case than ZTE for the Chinese government to muster domestic support for its "Made in China 2025" policy, the Sputnik analogy is actually wrong for China. Sputnik was a national security matter and ZTE is a case about commerce. China can actually supply most what ZTE needs to build functional telecom products (for example when the Obama administration cut off Intel sales to Chinese supercomputer projects, China went ahead and built the world's then fastest supercomputer with domestic chips anyway), it is just that they won't be competitive enough commercially. If both Huawei and ZTE were denied access to US products the pair could probably survive nicely in a closed Chinese market with somewhat inferior but perfectly functional offerings to Chinese telecoms. As it currently stands ZTE can't survive when its competitors don't suffer the same disadvantage. This being a commercial matter means the Chinese effort may very well be commercially wasteful even if their defense ministry might appreciate the enhanced capability. Indeed if they could make commercially competitive products in the area there is no reason why they would not have made them already. The right way to deal with this really is to just treat it as a commercial matter. ZTE would have failed with its resources transferred to a more capable firm. This still could be the effective outcome -- it is hard to imagine how telecoms world around can have confidence in ZTE when the supply could be turned off again over any minor infractions in the next ten years. The fine may be just the price to pay to buy time for a more orderly re-org.

gkanai 8y ago
> Sputnik was a national security matter and ZTE is a case about commerce. China views not having full control of semiconductors and operating systems (desktop and smartphone) as a national security matter.
- SilasX 8y ago
  And not unreasonably, given the possibility of putting backdoors into these.
bhouston 8y ago
It is possible for China to catch up here relatively fast. I give it 3 years and China will likely be better than Qualcomm although the maybe not Apple.
gumby 8y ago
> China can actually supply most what ZTE needs to build functional telecom products ... it is just that they won't be competitive enough commercially. If both Huawei and ZTE were denied access to US products the pair could probably survive nicely in a closed Chinese market with somewhat inferior but perfectly functional offerings to Chinese telecoms. There are other markets than the USA. SE Asia is flooded with phones from Oppo, Ding-ding etc which never sell in the USA anyway. And if China's RF chips are slightly out of standards compliance, as long as they work with Chinese base stations all will be fine in most markets. The US has overplayed its hand.

gkanai 8y ago

> Sputnik was a national security matter and ZTE is a case about commerce. China views not having full control of semiconductors and operating systems (desktop and smartphone) as a national security matter.

SilasX 8y ago
And not unreasonably, given the possibility of putting backdoors into these.

bhouston 8y ago

It is possible for China to catch up here relatively fast. I give it 3 years and China will likely be better than Qualcomm although the maybe not Apple.

gumby 8y ago

> China can actually supply most what ZTE needs to build functional telecom products ... it is just that they won't be competitive enough commercially. If both Huawei and ZTE were denied access to US products the pair could probably survive nicely in a closed Chinese market with somewhat inferior but perfectly functional offerings to Chinese telecoms. There are other markets than the USA. SE Asia is flooded with phones from Oppo, Ding-ding etc which never sell in the USA anyway. And if China's RF chips are slightly out of standards compliance, as long as they work with Chinese base stations all will be fine in most markets. The US has overplayed its hand.