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This such a short-sighted move. It might curb China today, but tomorrow they will have developed their own domestic technology and the US will no longer have a

This such a short-sighted move. It might curb China today, but tomorrow they will have developed their own domestic technology and the US will no longer have anything to sanction. It also stops Western companies' ability to grow.

melling 4y ago
Yes, but this will accelerate total R&D. Consumers will benefit because more competition means better products at lower prices. The same will happen for AI (machine learning). The United States wouldn’t have gone to the moon in the 1960’s if it weren’t for The Soviet Union.
- mantas 4y ago
  Mindless consumers? Yes. Citizens? Not so much. There’s so much more to life than better product at lower price.
- godelski 4y ago
  IP theft doesn't really promote competition that way because the one that steals the technology gains all the advantage. They don't have to recoup their costs and by default have lower margins. That's impossible for the original creator to compete against. IP protectionism on the other hand does promote competition[0]. If an inventor is able to create and market a successful product than competition has to invent their own versions. Not through theft, but through innovation. This will mean they do things differently. It also means they will NEED to gain some edge (either reduced cost or higher utility or different niche). While there was a lot of theft in the space program, it wasn't the same as it is today with the current situation. The supply chain issues mean that innovation still had to occur. The current situation is more like you subcontract a company to manufacture parts for you and then that company says "thanks for the instructions, we'll now just sell our own." There's no innovation pressure in this framework. [0] Too much protectionism also does hurt. If intellectual rights are provided for too long than a technology that has failed to properly be marketed by the creators is lost to society. Similarly, too broad of protection can also hinder competition. But there is a sweet spot which gives inventors the first rights and isn't too broad. This promotes competition.
djohnston 4y ago
Western companies don't grow in China. At best they get tenuous access while their IP is blatantly stolen to favor a domestic successor. The idea that western companies have anything to gain operating in China is naive IMO.
- NovemberWhiskey 4y ago
  True for manufacturing; probably less true for services.
  - mathverse 4y ago
    What services are even allowed to operate in China?
    - NovemberWhiskey 4y ago
      Securities, for example: http://www.xinhuanet.com/english/2020-04/01/c_138938273.htm http://www.xinhuanet.com/english/2020-04/01/c_138938273.htm
  - rasz 4y ago
    Thats why services were prohibited. Cloud providers had to sell off their assets https://www.datacenterdynamics.com/en/news/aws-sells-assets-in-china-to-comply-with-the-law-will-continue-offering-cloud-services/ https://www.datacenterdynamics.com/en/news/aws-sells-assets-... https://www.geekwire.com/2019/building-wall-around-cloud-china-will-soon-important-cloud-computing-market/ https://www.geekwire.com/2019/building-wall-around-cloud-chi...
- paganel 4y ago
  VW gets 40% (or thereabouts) of its revenues and profits from China, VW is a quite big Western car group.
  - kelnos 4y ago
    They get revenues in the short term, but in the long term they get copied and closed out.
gort19 4y ago
China is already moving full steam ahead to develop their own domestic technology because they don’t want the US to be able to sanction them. This move is not short sighted. It is simply about not giving China the IP they want to copy. China will get there anyway, just a little slower.
friedman23 4y ago
The lure of access to the Chinese market has been used and western leaders now realize it's a lie. The one sided cooperation with China is wisely being ended, if the Chinese government wants any technology or resource going forward it will have to be completely grown from within. But here's the kicker, why would any Chinese citizen go and start a company? All it means is you have a massive target on your back for one of the political elite to swoop in and take what you've built. Why would you work towards building a massive company like Jack Ma did when the reward is being tortured and disappeared when you step slightly out of line? So the best and most ambitious minds in China will go into politics or leave the country. Throw in the coming demographic collapse I think China's peak is behind us.
- njdvndsjkvn 4y ago
  >China's peak is behind us. Peak growth rate yes; total peak no. China failed to emulate Japan, Taiwan and South Korea's rapid acceleration. They will continue to grow at a faster rate than already wealthy nations but not at double digit speed and nowhere near the speed of Japan. It took Japan 30 years to go from poor to second largest economy. China "opened" in ~1980 and has failed to come close to that rate in 40 years. And as you say there is a time limit on rapid growth because it slows down as the country ages. China is aging too fast to maintain double digit growth which it has already lost for some years now IIRC.
- dirtyid 4y ago
  PRC still huge market for many multinationals, access is there for those who play ball. If anything PRC willing to reserve market share for foreign companies to maintain relations, i.e. no reason Nokia/Ericsson should have 5g contracts in PRC but they do. As for PRC talent, no bamboo ceiling and increasing mccarthyism targetting PRC individuals big perk. Most people are happy being mere millionaires than billionaires. And even billionaires fine if you don't go full retard like Ma and try to challenge state regulators. Best of PRC minds are staying in PRC, this isn't the 80s-00s when PRC was sending their best as state initiave to be educated abroad, most of the students going to west now are those with some English proficieny but can't hack it in gaokao. There's a reason why more and more sea turtles are returning to PRC for better prospects. Or why US has to literally sanction Chinese Americans from working in PRC semi. Plus PRC high skill demographic divident, the kind that drives innovation + high tech, high value development is just starting. The greatest pool of high end talent in human history is being churned out as we speak despite broader demographic decline that only makes PRC more resource independant. PRC won't peak for another 20 years, by then they will likely have sufficiently caught up in most advanced sectors to start eating the west's lunch. The convergence will be PRC closing gap which will erode western dominance by denying PRC market and wrestling shares from emerging economies fine with cheap PRC exports at the expense of west.
throwaway6734 4y ago
All they need to do is slow china down enough for their inevitable demographic collapse
filoleg 4y ago
> It might curb China today, but tomorrow they will have developed their own domestic technology. You believe it is a short-sighted move, because you only considered those two options, without considering the third one (which is much closer to the current reality than those two). As others have pointed out, it isn't a choice between "let China develop their own domestic tech on their own by making the US pull out" and "let the US companies grow by developing their stuff in China". It is a choice between "let China develop their own domestic tech on their own by making the US pull out" and "let China develop their own domestic tech even faster and with a higher chance of success, by allowing them to openly steal the tech developed in China by US companies, all while with China kneecapping and maintaining the de facto power over those US subsidiaries located in China".
- TazeTSchnitzel 4y ago
  > allowing them to openly steal the tech developed in China by US companies The sanctions have no real impact on industrial espionage and the like.
  - thatguy0900 4y ago
    You're saying the level of character is Chinese espionage is the same between a factory in the US and a factory in China mandated to have ccp personnel as emplyees?
    - rsj_hn 4y ago
      No, but companies are not shipping their ASML machines to china. US firms are already aware of this and avoid sending the secret sauce to China, they use china for final assembly, production of lower value components, etc.
  - filoleg 4y ago
    Yeah, but it is much easier to conduct industrial espionage when the company you are trying to steal tech from has a physical subsidiary on your territory, and when they are legally required to be under oversight from one of the party people officially assigned to "oversee" that subsidiary. I have no illusions that the industrial espionage will stop entirely as soon as the US pulls out of China. Even now, without pulling out, FBI and DOJ routinely catch their spies red-handed in their attempts to steal tech from within the US territory. I imagine that after the US pulls out, industrial espionage efforts of China from within the US territory will only increase, as their previous main avenue for that (aka the US subsidiaries located in China) ceases to exist. However, doing so makes things more difficult, risky, and expensive for them, thus slowing down the rate of gains from industrial espionage.
publicola1990 4y ago
Also does the move going to negatively impact US businesses and possibly US consumers. Ultimately these measures are restrictions on what US companies can do. These restrictions are going to affect their existing/potential revenues. So what the US companies get in the bargain with the US Government to offset their lost revenues due to this measure seems unclear.
ren_engineer 4y ago
if basic security doesn't work, why do people bother with passwords or basic cybersecurity measures? Most crimes are done on soft targets, even making things slightly difficult is enough Common sense says that making espionage even slightly harder has fantastic results, look at how restrictions on nuclear technology have been successful at preventing proliferation for decades. North Korea only got their nukes after the US lifted sanctions under Clinton for a few years and China helped them

melling 4y ago

Yes, but this will accelerate total R&D. Consumers will benefit because more competition means better products at lower prices. The same will happen for AI (machine learning). The United States wouldn’t have gone to the moon in the 1960’s if it weren’t for The Soviet Union.

mantas 4y ago
Mindless consumers? Yes. Citizens? Not so much. There’s so much more to life than better product at lower price.
godelski 4y ago
IP theft doesn't really promote competition that way because the one that steals the technology gains all the advantage. They don't have to recoup their costs and by default have lower margins. That's impossible for the original creator to compete against. IP protectionism on the other hand does promote competition[0]. If an inventor is able to create and market a successful product than competition has to invent their own versions. Not through theft, but through innovation. This will mean they do things differently. It also means they will NEED to gain some edge (either reduced cost or higher utility or different niche). While there was a lot of theft in the space program, it wasn't the same as it is today with the current situation. The supply chain issues mean that innovation still had to occur. The current situation is more like you subcontract a company to manufacture parts for you and then that company says "thanks for the instructions, we'll now just sell our own." There's no innovation pressure in this framework. [0] Too much protectionism also does hurt. If intellectual rights are provided for too long than a technology that has failed to properly be marketed by the creators is lost to society. Similarly, too broad of protection can also hinder competition. But there is a sweet spot which gives inventors the first rights and isn't too broad. This promotes competition.

djohnston 4y ago

Western companies don't grow in China. At best they get tenuous access while their IP is blatantly stolen to favor a domestic successor. The idea that western companies have anything to gain operating in China is naive IMO.

NovemberWhiskey 4y ago
True for manufacturing; probably less true for services.
- mathverse 4y ago
  What services are even allowed to operate in China?
  - NovemberWhiskey 4y ago
    Securities, for example: http://www.xinhuanet.com/english/2020-04/01/c_138938273.htm http://www.xinhuanet.com/english/2020-04/01/c_138938273.htm
- rasz 4y ago
  Thats why services were prohibited. Cloud providers had to sell off their assets https://www.datacenterdynamics.com/en/news/aws-sells-assets-in-china-to-comply-with-the-law-will-continue-offering-cloud-services/ https://www.datacenterdynamics.com/en/news/aws-sells-assets-... https://www.geekwire.com/2019/building-wall-around-cloud-china-will-soon-important-cloud-computing-market/ https://www.geekwire.com/2019/building-wall-around-cloud-chi...
paganel 4y ago
VW gets 40% (or thereabouts) of its revenues and profits from China, VW is a quite big Western car group.
- kelnos 4y ago
  They get revenues in the short term, but in the long term they get copied and closed out.

gort19 4y ago

China is already moving full steam ahead to develop their own domestic technology because they don’t want the US to be able to sanction them. This move is not short sighted. It is simply about not giving China the IP they want to copy. China will get there anyway, just a little slower.

friedman23 4y ago

The lure of access to the Chinese market has been used and western leaders now realize it's a lie. The one sided cooperation with China is wisely being ended, if the Chinese government wants any technology or resource going forward it will have to be completely grown from within. But here's the kicker, why would any Chinese citizen go and start a company? All it means is you have a massive target on your back for one of the political elite to swoop in and take what you've built. Why would you work towards building a massive company like Jack Ma did when the reward is being tortured and disappeared when you step slightly out of line? So the best and most ambitious minds in China will go into politics or leave the country. Throw in the coming demographic collapse I think China's peak is behind us.

njdvndsjkvn 4y ago
>China's peak is behind us. Peak growth rate yes; total peak no. China failed to emulate Japan, Taiwan and South Korea's rapid acceleration. They will continue to grow at a faster rate than already wealthy nations but not at double digit speed and nowhere near the speed of Japan. It took Japan 30 years to go from poor to second largest economy. China "opened" in ~1980 and has failed to come close to that rate in 40 years. And as you say there is a time limit on rapid growth because it slows down as the country ages. China is aging too fast to maintain double digit growth which it has already lost for some years now IIRC.
dirtyid 4y ago
PRC still huge market for many multinationals, access is there for those who play ball. If anything PRC willing to reserve market share for foreign companies to maintain relations, i.e. no reason Nokia/Ericsson should have 5g contracts in PRC but they do. As for PRC talent, no bamboo ceiling and increasing mccarthyism targetting PRC individuals big perk. Most people are happy being mere millionaires than billionaires. And even billionaires fine if you don't go full retard like Ma and try to challenge state regulators. Best of PRC minds are staying in PRC, this isn't the 80s-00s when PRC was sending their best as state initiave to be educated abroad, most of the students going to west now are those with some English proficieny but can't hack it in gaokao. There's a reason why more and more sea turtles are returning to PRC for better prospects. Or why US has to literally sanction Chinese Americans from working in PRC semi. Plus PRC high skill demographic divident, the kind that drives innovation + high tech, high value development is just starting. The greatest pool of high end talent in human history is being churned out as we speak despite broader demographic decline that only makes PRC more resource independant. PRC won't peak for another 20 years, by then they will likely have sufficiently caught up in most advanced sectors to start eating the west's lunch. The convergence will be PRC closing gap which will erode western dominance by denying PRC market and wrestling shares from emerging economies fine with cheap PRC exports at the expense of west.

throwaway6734 4y ago

All they need to do is slow china down enough for their inevitable demographic collapse

filoleg 4y ago

> It might curb China today, but tomorrow they will have developed their own domestic technology. You believe it is a short-sighted move, because you only considered those two options, without considering the third one (which is much closer to the current reality than those two). As others have pointed out, it isn't a choice between "let China develop their own domestic tech on their own by making the US pull out" and "let the US companies grow by developing their stuff in China". It is a choice between "let China develop their own domestic tech on their own by making the US pull out" and "let China develop their own domestic tech even faster and with a higher chance of success, by allowing them to openly steal the tech developed in China by US companies, all while with China kneecapping and maintaining the de facto power over those US subsidiaries located in China".

TazeTSchnitzel 4y ago
> allowing them to openly steal the tech developed in China by US companies The sanctions have no real impact on industrial espionage and the like.
- thatguy0900 4y ago
  You're saying the level of character is Chinese espionage is the same between a factory in the US and a factory in China mandated to have ccp personnel as emplyees?
  - rsj_hn 4y ago
    No, but companies are not shipping their ASML machines to china. US firms are already aware of this and avoid sending the secret sauce to China, they use china for final assembly, production of lower value components, etc.
- filoleg 4y ago
  Yeah, but it is much easier to conduct industrial espionage when the company you are trying to steal tech from has a physical subsidiary on your territory, and when they are legally required to be under oversight from one of the party people officially assigned to "oversee" that subsidiary. I have no illusions that the industrial espionage will stop entirely as soon as the US pulls out of China. Even now, without pulling out, FBI and DOJ routinely catch their spies red-handed in their attempts to steal tech from within the US territory. I imagine that after the US pulls out, industrial espionage efforts of China from within the US territory will only increase, as their previous main avenue for that (aka the US subsidiaries located in China) ceases to exist. However, doing so makes things more difficult, risky, and expensive for them, thus slowing down the rate of gains from industrial espionage.

publicola1990 4y ago

Also does the move going to negatively impact US businesses and possibly US consumers. Ultimately these measures are restrictions on what US companies can do. These restrictions are going to affect their existing/potential revenues. So what the US companies get in the bargain with the US Government to offset their lost revenues due to this measure seems unclear.

ren_engineer 4y ago

if basic security doesn't work, why do people bother with passwords or basic cybersecurity measures? Most crimes are done on soft targets, even making things slightly difficult is enough Common sense says that making espionage even slightly harder has fantastic results, look at how restrictions on nuclear technology have been successful at preventing proliferation for decades. North Korea only got their nukes after the US lifted sanctions under Clinton for a few years and China helped them