7 ms·

> The Brookings Institution thinks that the US can shut China out of high-end semiconductor production indefinitely. That seems like a pretty foolish conception

by devy 6y ago

> The Brookings Institution thinks that the US can shut China out of high-end semiconductor production indefinitely. That seems like a pretty foolish conception to me. U.S. had done that to Japanese Semiconductor industry in the 80s and 90s[1], which was why South Korean semiconductor industries flourished and Samsung became the king of Memory chips (it used to be Toshiba etc.) And today it's Huawei. Who's gonna be the next in the future? [1]: https://www.nber.org/chapters/c8717.pdf https://www.nber.org/chapters/c8717.pdf

jorblumesea 6y ago
The difference is that Japan and SK were strategic allies. Intelligence sharing agreements were strong, the US provided security guarantees. It's an acceptable loss, to a certain extent, to cede the market to the US, despite it hurting cutting edge domestic industries. China will not accept US market dominance in chip production, or frankly, US dominance in any industry.
- Synaesthesia 6y ago
  I think you mean to say the US won’t accept a challenger to its dominance of the computer technology markets.
  - jorblumesea 6y ago
    No, what I said is exactly what I meant. Some countries will accept the gutting of certain domestic industries because it doesn't threaten national security interests or strategic goals.
- russli1993 6y ago
  I want to bring a point of view from a Chinese person. These are questions Chinese people often ask: why is that a factory worker in China makes 4000rmb(560usd) per month, while a US worker makes 2000usd per month and work for less hours. Why is that pay for software engineers and researchers in China average are much lower than the US and the hours are much longer? The fundamental issue is that US companies can drive much higher margins than Chinese companies, and one of the reasons is they have much better technology. Technology increases the barrier to entry and increases the value add to a product. If we look a IPhone, Chinese companies and its workers only assemble the phone. While all of the high tech components that makes an Iphone what is, like chips, camera senors, display, even the glass panel are made in other countries. I don't remember the exact value, but its safe to say that out of a $1000 iphone, $300 is BOM, and Chinese companies and its workers gets $2 for assembling the phone. The rest all goes to high tech suppliers and Apple itself. This is true across a wide range of industries. If you think about it, in today's global economic system, China actually gets a small share of the value add in the economy chain because it only plays the low end. Industries that can generate high value add also benefit incomes of nearby industries because money flows. This is why restaurant workers in California earns more than the person doing the same job in Nebraska. (Btw, when US counts trade with China, an Iphone is counted for the export price from China to US, for example, $300 for the BOM. But China imported most of the most valuable/high margin components from outside, it only earned $2 for assembling the phone. US thought China made $300 making the phone, but it didn't. Also corporate earnings US companies makes in China are not counted in the US-China trade. So in my opinion, its not true to say China is ripping off the US in the China-US trade relationship because of the trade deficits) If you go to China, or other developing nations, for example, in South America or South Asia, you know that there is huge quality of life difference. Dont look at lives in Shanghai, look at Mid west of China. China is huge, while the median income today is 30,000 yuan/year, about 600million people still have 12,000 yuan/year (1600 usd). And Chinese people all ask "we are humans, why should there be such a massive quality of live difference. And how could we work towards to close the gap?" And given the world's economy system today, which is a free market, capitalist and "best product sells" systems, then the only way to increase qualify of life is to climb to value add chain. But that doesn't mean its a zero sum game, its China or US. Increasing income will increase people's buying power, making the market larger. Think about it, in 1990, GDP per captia in China was 300 USD, if Apple tries to sale a $700 iphone, no one in China will be able to afford it. Apple will not get any revenue. Today with 30,000yuan/year median income, its said that China has about 200million people that can be considered middle class by PPP standards. Apple and a host of US companies can sell to this population, and China contributes a large percentage to Apple's revenue. Also in turns, Apple uses this revenue to continue invest in R&D, increasing the barrier to entry and competitiveness of its product around the world, earn more money in the process. Also, cheap assembly cost in China contributes to Apple's margins too. So its a collaboration, not a zero sum game. For past 20 years of Chinese industries increasingly competed with the outside industries, making more and more similar products, US GDP has continued to grow. Corporate revenue of the s&p500 has continued to increase to record levels. Also, its interesting that GM has not being that competitive in the US market, but is making a lot of sales in China. Also Tesla, if you look at the recent bullish analyst cases, China sales is one of the pillars. China never has a problem with US companies being successful. Its not like government is jealous of the US industries and want them dead. "oh the Americans shouldn't make money". But its "how should our people survive and live, how should their quality of life improve?". From an economic system and social development standpoint, its bound that the Chinese society will go up in the value add ladder. Chinese people want good jobs that pay well and have good work life balance too. But these things don't come from the thin air. In the world of free competition, the best product sells. These things have to be supported by a industry that can compete in the global marketplace. If you look at Chinese government's work during the last 40 years, starting from the reforms in the 80s, one of the primary goal is poverty alleviation, and build sustainable income sources for households under the principles of the market economy. That work is still going on today. Today the work is centered around the villages and poor neighborhoods in remote areas which faces systematic discrimination in the market economy. Solve the blockers that prevent them from joining the market economy, and jump start their place in the market economy. The result of this process is ordinary households have more income that they can earn by themselves, and they can choose to spend that money in a free open market however they want. And many spend their money on American products due to the superiority of the products. Also, if you look at the government's policies from the past and going forward, continue to increase foreign companies access to the Chinese market was and will continue to be a fundamental policy. Look at how quickly Tesla could set up shop in China, and much sales they are getting from Chinese market just after a few months. Also IP protection is getting much stronger as well. You can also look at the situation this way, the government invests in the people by doing things like: building bridges, improve educations and allow them to find work. That investment later becomes personal incomes, which flows to the domestic and the world's economy (including US). In summary: I think that US-China economy is not a zero-sum game. For us to win they have to lose. It could be a win-win situation.
  - JoeAltmaier 6y ago
    I'm not so sure any more. China consumes 25% of the USA industrial automation machinery. They're obsoleting jobs in China at an accelerating rate. They will reach and surpass America's looming issue of the unemployed and unemployable 'labor' class growing beyond manageable bounds. When industrial output is largely automated, where are all those people to go? Folks wave their hands and imagine some better future where they do more useful things. But the number of useful things is actually rapidly diminishing. Creation of products and materials doesn't need actual humans, not in the numbers they historically did. So whatever China did in the last 40 years, they will have to do something completely different in the next 40 (or 20 or 10). The problems are different. Never mind "the people control the means of production". The people will have nothing to exchange of value to the new industrial complex, when labor becomes useless and meaningless.
  - jholman 6y ago
    I think there's two separate things going on here. On the one hand, the world is full of horrifying inequality, which you highlight and indeed perhaps understate. Inequality within America, inequality within China, inequality between Americans and Chinese, and of course a multiplicity of other permutations. As you say quite correctly: "Chinese people want good jobs that pay well and have good work life balance too." And so they should! On the other hand, there is imperialism. The Chinese government is an imperialist government, I think there is no doubt. It makes sense for governments of other nations to attempt to limit the growth of power of that government. Of course, those last two sentences make just as much sense when describing America, too. My point is that most of the conversation, in the article and in the comments thread, is about the relationships that societies have to each other. And most of your comment is about the relationships that individuals have to their lives. I agree with the majority of what you said, I just don't think it's directly relevant. I'm not even saying that China "shouldn't be" imperialist (though I wish China and America were both less imperialist, but I might as well wish to fly by flapping my ears). I'm only saying that if you think you'd enjoy patting a tiger, and you think the tiger would enjoy the pats (the pats could be win-win!), that doesn't mean that you go pat the tiger. (is China the tiger and America the would-be pat-er, or vice versa? doesn't matter!)
  - 6y ago
harpratap 6y ago
It simply boggles my mind all the things US did to Japan when they were booming and were supposed to go past US and the fact that we don't really talk about it much. I think it all can be traced to this - https://www.nytimes.com/1994/10/09/world/cia-spent-millions-to-support-japanese-right-in-50-s-and-60-s.html https://www.nytimes.com/1994/10/09/world/cia-spent-millions-... this party has essentially been the defacto leader of Japan and it's policies.
- dtwest 6y ago
  Or maybe traced to WW2. Let's not forget what Japan did to get the US involved at all. After Japan surrendered, the US helped Japan back on their feet, much to the surprise of many older Japanese who were expecting to be raped and pillaged. After all, that's what Japan was doing to China at the time, and probably what it had planned to do to the US if they won. I don't see how it is mind boggling that the winner of an armed conflict would try to install a friendly post war government. Or that the US still had influence lasting decades after the conflict.
  - discourses 6y ago
    From what I heard, it was not that rosy. But US needed a base for the Korean war. That gave Japan some leverage.
    - dtwest 6y ago
      War occupations are never rosy, I didn't mean to paint it that way. But you could certainly make the argument it was rosy compared to the Japanese occupation of China.
    - perl4ever 6y ago
      My first reaction is that the implication the Korean war was somehow being planned by the US at the time of the Japanese surrender is some crazy revisionist propaganda. But can you elaborate on what you are trying to say and what supports it?
hristov 6y ago
Huawei does not make any memory chips.

by devy 6y ago

jorblumesea 6y ago

The difference is that Japan and SK were strategic allies. Intelligence sharing agreements were strong, the US provided security guarantees. It's an acceptable loss, to a certain extent, to cede the market to the US, despite it hurting cutting edge domestic industries. China will not accept US market dominance in chip production, or frankly, US dominance in any industry.

Synaesthesia 6y ago
I think you mean to say the US won’t accept a challenger to its dominance of the computer technology markets.
- jorblumesea 6y ago
  No, what I said is exactly what I meant. Some countries will accept the gutting of certain domestic industries because it doesn't threaten national security interests or strategic goals.
russli1993 6y ago
I want to bring a point of view from a Chinese person. These are questions Chinese people often ask: why is that a factory worker in China makes 4000rmb(560usd) per month, while a US worker makes 2000usd per month and work for less hours. Why is that pay for software engineers and researchers in China average are much lower than the US and the hours are much longer? The fundamental issue is that US companies can drive much higher margins than Chinese companies, and one of the reasons is they have much better technology. Technology increases the barrier to entry and increases the value add to a product. If we look a IPhone, Chinese companies and its workers only assemble the phone. While all of the high tech components that makes an Iphone what is, like chips, camera senors, display, even the glass panel are made in other countries. I don't remember the exact value, but its safe to say that out of a $1000 iphone, $300 is BOM, and Chinese companies and its workers gets $2 for assembling the phone. The rest all goes to high tech suppliers and Apple itself. This is true across a wide range of industries. If you think about it, in today's global economic system, China actually gets a small share of the value add in the economy chain because it only plays the low end. Industries that can generate high value add also benefit incomes of nearby industries because money flows. This is why restaurant workers in California earns more than the person doing the same job in Nebraska. (Btw, when US counts trade with China, an Iphone is counted for the export price from China to US, for example, $300 for the BOM. But China imported most of the most valuable/high margin components from outside, it only earned $2 for assembling the phone. US thought China made $300 making the phone, but it didn't. Also corporate earnings US companies makes in China are not counted in the US-China trade. So in my opinion, its not true to say China is ripping off the US in the China-US trade relationship because of the trade deficits) If you go to China, or other developing nations, for example, in South America or South Asia, you know that there is huge quality of life difference. Dont look at lives in Shanghai, look at Mid west of China. China is huge, while the median income today is 30,000 yuan/year, about 600million people still have 12,000 yuan/year (1600 usd). And Chinese people all ask "we are humans, why should there be such a massive quality of live difference. And how could we work towards to close the gap?" And given the world's economy system today, which is a free market, capitalist and "best product sells" systems, then the only way to increase qualify of life is to climb to value add chain. But that doesn't mean its a zero sum game, its China or US. Increasing income will increase people's buying power, making the market larger. Think about it, in 1990, GDP per captia in China was 300 USD, if Apple tries to sale a $700 iphone, no one in China will be able to afford it. Apple will not get any revenue. Today with 30,000yuan/year median income, its said that China has about 200million people that can be considered middle class by PPP standards. Apple and a host of US companies can sell to this population, and China contributes a large percentage to Apple's revenue. Also in turns, Apple uses this revenue to continue invest in R&D, increasing the barrier to entry and competitiveness of its product around the world, earn more money in the process. Also, cheap assembly cost in China contributes to Apple's margins too. So its a collaboration, not a zero sum game. For past 20 years of Chinese industries increasingly competed with the outside industries, making more and more similar products, US GDP has continued to grow. Corporate revenue of the s&p500 has continued to increase to record levels. Also, its interesting that GM has not being that competitive in the US market, but is making a lot of sales in China. Also Tesla, if you look at the recent bullish analyst cases, China sales is one of the pillars. China never has a problem with US companies being successful. Its not like government is jealous of the US industries and want them dead. "oh the Americans shouldn't make money". But its "how should our people survive and live, how should their quality of life improve?". From an economic system and social development standpoint, its bound that the Chinese society will go up in the value add ladder. Chinese people want good jobs that pay well and have good work life balance too. But these things don't come from the thin air. In the world of free competition, the best product sells. These things have to be supported by a industry that can compete in the global marketplace. If you look at Chinese government's work during the last 40 years, starting from the reforms in the 80s, one of the primary goal is poverty alleviation, and build sustainable income sources for households under the principles of the market economy. That work is still going on today. Today the work is centered around the villages and poor neighborhoods in remote areas which faces systematic discrimination in the market economy. Solve the blockers that prevent them from joining the market economy, and jump start their place in the market economy. The result of this process is ordinary households have more income that they can earn by themselves, and they can choose to spend that money in a free open market however they want. And many spend their money on American products due to the superiority of the products. Also, if you look at the government's policies from the past and going forward, continue to increase foreign companies access to the Chinese market was and will continue to be a fundamental policy. Look at how quickly Tesla could set up shop in China, and much sales they are getting from Chinese market just after a few months. Also IP protection is getting much stronger as well. You can also look at the situation this way, the government invests in the people by doing things like: building bridges, improve educations and allow them to find work. That investment later becomes personal incomes, which flows to the domestic and the world's economy (including US). In summary: I think that US-China economy is not a zero-sum game. For us to win they have to lose. It could be a win-win situation.
- JoeAltmaier 6y ago
  I'm not so sure any more. China consumes 25% of the USA industrial automation machinery. They're obsoleting jobs in China at an accelerating rate. They will reach and surpass America's looming issue of the unemployed and unemployable 'labor' class growing beyond manageable bounds. When industrial output is largely automated, where are all those people to go? Folks wave their hands and imagine some better future where they do more useful things. But the number of useful things is actually rapidly diminishing. Creation of products and materials doesn't need actual humans, not in the numbers they historically did. So whatever China did in the last 40 years, they will have to do something completely different in the next 40 (or 20 or 10). The problems are different. Never mind "the people control the means of production". The people will have nothing to exchange of value to the new industrial complex, when labor becomes useless and meaningless.
- jholman 6y ago
  I think there's two separate things going on here. On the one hand, the world is full of horrifying inequality, which you highlight and indeed perhaps understate. Inequality within America, inequality within China, inequality between Americans and Chinese, and of course a multiplicity of other permutations. As you say quite correctly: "Chinese people want good jobs that pay well and have good work life balance too." And so they should! On the other hand, there is imperialism. The Chinese government is an imperialist government, I think there is no doubt. It makes sense for governments of other nations to attempt to limit the growth of power of that government. Of course, those last two sentences make just as much sense when describing America, too. My point is that most of the conversation, in the article and in the comments thread, is about the relationships that societies have to each other. And most of your comment is about the relationships that individuals have to their lives. I agree with the majority of what you said, I just don't think it's directly relevant. I'm not even saying that China "shouldn't be" imperialist (though I wish China and America were both less imperialist, but I might as well wish to fly by flapping my ears). I'm only saying that if you think you'd enjoy patting a tiger, and you think the tiger would enjoy the pats (the pats could be win-win!), that doesn't mean that you go pat the tiger. (is China the tiger and America the would-be pat-er, or vice versa? doesn't matter!)
- 6y ago

harpratap 6y ago

It simply boggles my mind all the things US did to Japan when they were booming and were supposed to go past US and the fact that we don't really talk about it much. I think it all can be traced to this - https://www.nytimes.com/1994/10/09/world/cia-spent-millions-to-support-japanese-right-in-50-s-and-60-s.html https://www.nytimes.com/1994/10/09/world/cia-spent-millions-... this party has essentially been the defacto leader of Japan and it's policies.

dtwest 6y ago
Or maybe traced to WW2. Let's not forget what Japan did to get the US involved at all. After Japan surrendered, the US helped Japan back on their feet, much to the surprise of many older Japanese who were expecting to be raped and pillaged. After all, that's what Japan was doing to China at the time, and probably what it had planned to do to the US if they won. I don't see how it is mind boggling that the winner of an armed conflict would try to install a friendly post war government. Or that the US still had influence lasting decades after the conflict.
- discourses 6y ago
  From what I heard, it was not that rosy. But US needed a base for the Korean war. That gave Japan some leverage.
  - dtwest 6y ago
    War occupations are never rosy, I didn't mean to paint it that way. But you could certainly make the argument it was rosy compared to the Japanese occupation of China.
  - perl4ever 6y ago
    My first reaction is that the implication the Korean war was somehow being planned by the US at the time of the Japanese surrender is some crazy revisionist propaganda. But can you elaborate on what you are trying to say and what supports it?

hristov 6y ago

Huawei does not make any memory chips.