> But it's absolutely godsent from the perspective of China being a developing country that 1) still needs to lift up a lot of people, not only out of monetary

> But it's absolutely godsent from the perspective of China being a developing country that 1) still needs to lift up a lot of people, not only out of monetary poverty, but also out of educational and skill poverty Chip Design and Manufacturing only generates so many jobs. These are highly specialized and automated industries that don't employ that many people. A subset of the younger generation of Chinese absolutely can upskill into this, yet what about the rest of the workforce who wasn't born before the 2000s or didn't studying EECS in university? And the rural-urban divide still remains as Chinese govt stats show. > You can see this spillover effect in the renewable energy and EV market, for example. They spent decades learning how to build batteries, solar panels, electric engines, etc. and now the whole is bigger than the sum of the parts: expertise in building solar panels has positive spillover effects on the semiconductor industry because some of the technology is shared; expertise in building batteries is synergetic with expertise in building electric engines; etc Absolutely! And that's why most trade parters have begun either revoking MFN status and/or adding export controls. What's the point of building all this if several large markets increasingly close off access or require Chinese players to build JVs with local players? That excess capacity is increasingly difficult to export. > Truly, money is not everything. The real economy is not all about money. GDP is but a proxy for real value Agreed, yet the median Chinese person remains poor by global standards (median household income is 33k yuan/yr as Stats CN has announced). What do you do with the vast majority of the workforce who does not have the skills to work in high skilled manufacturing or services jobs? It's not like the social safety net has been expanded significantly anyhow. Which is the whole point of this arms race from the American PoV - forcing relative stagnation/isolation unless you return to the negotiating table [0] Already Xi's economic advisor Zhou Qiren (invited to the Third Plenum) has been advocating this for years now [1] because the current system is bordering on State Capitalism leading to inefficiencies and unnecessary domestic competition. Edit: cannot reply so replying here > It seems to me if Huawei ban had any deterimental effect on China's GDP per capita then it would be more like a rounding error. Yet the tens of billions of dollars spent propping up Huawei and similar firms could have been spent shoring up domestic consumption so that it could subsidize these champions. Instead it's basically being burnt as this leads to overproduction, as household incomes and consumption show. If you keep spending such exorbitant amounts on production but not on consumption, you end up with overcapacity - which itself is damaging long term as this makes maintaince significantly more expensive, as well as undercuts the domestic market by making an entire industry dependent on government dole. [0] - https://www.tandfonline.com/doi/pdf/10.1080/0163660X.2018.1520571?casa_token=6g2I1cbPif8AAAAA%3AsmXXvBT2M319c7Kno0lH7cMTwHEp_sAJcZdq5K95L8fprjD66bKyfhRovv2zn-Xduha50mn_ https://www.tandfonline.com/doi/pdf/10.1080/0163660X.2018.15... [1] - https://link.springer.com/book/10.1007/978-981-15-9885-2 https://link.springer.com/book/10.1007/978-981-15-9885-2