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I agree with the article that the US can damage China's economy for several years by restricting components (but that it also will eventually be able to domesti

I agree with the article that the US can damage China's economy for several years by restricting components (but that it also will eventually be able to domestically produce the components required). I also agree with the article that doing so would hurt the US companies that produce the components that China no longer could buy. What I don't get, is what specifically will be achieved by doing this? How is the US coming out "on top"? I get that China has different values than the US, but I don't understand how restricting components fixes that.

ardy42 7y ago
> What I don't get, is what specifically will be achieved by doing this? How is the US coming out "on top"? I get that China has different values than the US, but I don't understand how restricting components fixes that. I'm just speculating, but it could perhaps hurt the desirability of their advanced exports on the world market, and create space for other countries to fill the void. One of China's current political advantages is that it's the current "workshop of the world," and if that's reduced they may end up being less influential. It's unlikely to affect the domestic political situation there, but that may be a lost cause for this generation.
- throwaway34241 7y ago
  So to use a specific example of what I think you are saying about restricting components making other countries more influential: Huawei can't buy Qualcomm chips, so they use Chinese chips instead (which are inferior for several years before they catch up), so they are less competitive in Europe and Samsung sells more, which causes Korea to have a bit more worldwide influence compared to China over that several year period? That seems plausible, but also pretty speculative and it seems like there could be negative consequences too. For example, if the Chinese market switches over to Chinese chips, a lot more money will be invested in Chinese chips and they will probably develop more quickly. Normally the US complains about China blocking US products, the US blocking US products seems a bit less usual. The article points out that there a problems with China, and points out that there is a policy available that will hurt US companies and Chinese companies. I feel like I am missing the part though, where this policy fixes the problems with China. I feel like I need to understand that part before I am convinced that this is a good idea.
  - CharlesColeman 7y ago
    > That seems plausible, but also pretty speculative and it seems like there could be negative consequences too. For example, if the Chinese market switches over to Chinese chips, a lot more money will be invested in Chinese chips and they will probably develop more quickly. Those negative consequences presume that the Chinese won't have the goal of switching over to domestic chips if they have access to American chips, but I think that's false. They've shown a strong desire to pursue import substitution and then turn those companies into international competitors. Denying the American supplies forces them to switch before they're ready, rather than when they're fully ready. It's also not guaranteed that the Chinese investments will bear fruit. For instance, China has been trying to acquire modern jet engine technology for decades and decades, and still hasn't succeeded. IIRC, jet engines and microchips have a major characteristic in common: most of the magic is in the manufacturing techniques and those are difficult to reverse engineer from finished products.
chewz 7y ago
It is not just about chips. This is probably the golden opportunity for the US to cripple China's export and push China into longer cycle recession which is long overdue anyway. That would cripple Chinese economy for next 20-40 years, give way for social problems and give the US and the rest some breathing space. The other scenario is that Trade War will lead to real war (possibly by proxy). The situation is quite similar to pre WWI with China being in a role of Imperial Germany with fast growing economy, teritorial demands and unstable ruler. That war could also stimulate the US economy. These are pretty dim scenarios but surely someone in Washington is thinking in terms or real-politik. In Bejing they do.
Fjolsvith 7y ago
> What I don't get, is what specifically will be achieved by doing this? Its all in the Art of the Deal. You should read it. TLDR: They are negotiating points that Trump is using to advance the US position in the trade talks.

ardy42 7y ago

> What I don't get, is what specifically will be achieved by doing this? How is the US coming out "on top"? I get that China has different values than the US, but I don't understand how restricting components fixes that. I'm just speculating, but it could perhaps hurt the desirability of their advanced exports on the world market, and create space for other countries to fill the void. One of China's current political advantages is that it's the current "workshop of the world," and if that's reduced they may end up being less influential. It's unlikely to affect the domestic political situation there, but that may be a lost cause for this generation.

throwaway34241 7y ago
So to use a specific example of what I think you are saying about restricting components making other countries more influential: Huawei can't buy Qualcomm chips, so they use Chinese chips instead (which are inferior for several years before they catch up), so they are less competitive in Europe and Samsung sells more, which causes Korea to have a bit more worldwide influence compared to China over that several year period? That seems plausible, but also pretty speculative and it seems like there could be negative consequences too. For example, if the Chinese market switches over to Chinese chips, a lot more money will be invested in Chinese chips and they will probably develop more quickly. Normally the US complains about China blocking US products, the US blocking US products seems a bit less usual. The article points out that there a problems with China, and points out that there is a policy available that will hurt US companies and Chinese companies. I feel like I am missing the part though, where this policy fixes the problems with China. I feel like I need to understand that part before I am convinced that this is a good idea.
- CharlesColeman 7y ago
  > That seems plausible, but also pretty speculative and it seems like there could be negative consequences too. For example, if the Chinese market switches over to Chinese chips, a lot more money will be invested in Chinese chips and they will probably develop more quickly. Those negative consequences presume that the Chinese won't have the goal of switching over to domestic chips if they have access to American chips, but I think that's false. They've shown a strong desire to pursue import substitution and then turn those companies into international competitors. Denying the American supplies forces them to switch before they're ready, rather than when they're fully ready. It's also not guaranteed that the Chinese investments will bear fruit. For instance, China has been trying to acquire modern jet engine technology for decades and decades, and still hasn't succeeded. IIRC, jet engines and microchips have a major characteristic in common: most of the magic is in the manufacturing techniques and those are difficult to reverse engineer from finished products.

chewz 7y ago

It is not just about chips. This is probably the golden opportunity for the US to cripple China's export and push China into longer cycle recession which is long overdue anyway. That would cripple Chinese economy for next 20-40 years, give way for social problems and give the US and the rest some breathing space. The other scenario is that Trade War will lead to real war (possibly by proxy). The situation is quite similar to pre WWI with China being in a role of Imperial Germany with fast growing economy, teritorial demands and unstable ruler. That war could also stimulate the US economy. These are pretty dim scenarios but surely someone in Washington is thinking in terms or real-politik. In Bejing they do.

Fjolsvith 7y ago

> What I don't get, is what specifically will be achieved by doing this? Its all in the Art of the Deal. You should read it. TLDR: They are negotiating points that Trump is using to advance the US position in the trade talks.