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.
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".
The sanctions have no real impact on industrial espionage and the like.
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.
many of the most well known sanctioned nations (north korea, iran, turkiye, etc.) have just made their own stuff to varying degrees, based on how much they aren't allowed to buy.
furthermore bigger nations like china can fire back hard if need be.
we saw how europe's sanctions against russia were met with gas denial.
all in all, sanctions usually don't do much outside of wartime other than piss off the target of said sanctions, and actually push them to rely on you less.
1. In the case of china, we are forcing them to spend more on very high tech, strategic investments, effectively accelerating their march up the value chain.
2. It's true that there is a cost in the extra R&D spending, but there is also a cost in the lost revenue of western chip makers. NVIDIA is going to take a bath -- that will cut into their R&D budget, etc.
So we are also imposing costs on our own R&D spending while accelerating the R&D spending of our adversary - and let's just admit that China is an adversary.
This is a very strange departure from how these types of trade wars have been historically waged. Normally if you want to hurt some countries' industry and help your own, you put a tariff on their stuff and you subsidize your stuff. E.g. make it harder for China to sell their cars here and easier to sell your cars there. You encourage more exports and discourage imports.
What we are doing now is making it harder to sell our stuff there, but no tariff on the importation of Chinese chips into the U.S. So we are discouraging exports without blocking imports. And this policy is supposed to hurt China and help the US, which I find completely baffling.
This is, unfortunately, par for the course with sanctions mania, where the only policy lever we appear to have with anyone is sanctions. These sanctions are economically disastrous for the US and for Western nations generally. The only thing I can think of is that because we don't see the impact when we sanction small nations such as Cuba, we think there will still be no impact when we sanction big economies. But there is an impact, and future economic historians will look on this period of sanctions as being far more economically suicidal than the mania on trade barriers. Because a sanction is just a one way trade barrier -- directed only at yourself and your own industry.
That seems kind of backwards to me. My read of the sanctions is that intelligence indicated that the presence of this tech was accelerating China's (largely espionage-based) development, so the policy answer was to reduce access to the tech.
I can't reference this story[1] enough. The Chinese government literally stole ARM China right out from underneath ARM's nose. This sort of brazen technology heist won't be possible given sanctions.
[1] https://www.semianalysis.com/p/the-semiconductor-heist-of-th...
A lot of the commenters in this thread appear to be completely unaware of how massive of a shift has occurred with the dictatorship of Xi Jinping.
Xi is not Hu Jintao (whom he had marched out of the CCP Congress in public view for maximum humiliation). He is not only a dictator, but also deeply insecure. This isn't another highly competent "engineer turned leader" like his predecessors. Xi is a thoroughly mediocre, lifelong political creature. He has consolidated power to the greatest degree since Chairman Mao, and has turned the CCP into a cult of personality.
He is running the Chinese economy off a cliff, meaning that China's ability to develop the tech domestically is cratering. It's hard to emphasize how different China is than before 2012. If a leader like Hu Jintao was running China, they would be able to develop this tech relatively quickly. But Xi? Everything he micromanages turns to shit.
If you believed such a ridiculous notion, what else do you believe that is false?
What tech would that be?
Btw, China has already surpassed USA in scientific output [1]. Putting their research in applied use is just around the corner, and believing that they can't do it is just wishful thinking.
[1] https://en.wikipedia.org/wiki/List_of_countries_by_number_of...
Another indicator you can look at is R&D expenditure as a percentage of GDP. China hasn't caught up with the US yet, but it has been steadily ramping up: [1].
0. https://www.nature.com/nature-index/country-outputs/generate...
1. https://data.worldbank.org/indicator/GB.XPD.RSDV.GD.ZS?locat...
Also there's no information from that link on who is citing these papers. Maybe it's circular citations.
Seems like a poor measure without further information.
https://www.datacenterdynamics.com/en/news/aws-sells-assets-...
https://www.geekwire.com/2019/building-wall-around-cloud-chi...
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.
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.
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.
It's not about money. Creating a new technology or business is like giving birth and if you are based in China, Xi and his friends can come and rip the baby out of your crib. It doesn't matter how successful or high profile you are, some communist party leader can and will rape you, figuratively and literally (See Peng Shuai).
People take chance if reward offsets. And it's easy money if business aligns with state interests, with Ma being properly fucked over after being warned many times when his ponzi lending proposal scheme. Because prospect of stupid amount money made his brain go dumb dumb and think it was fine challenging regulators. See how PRC hard tech jobs that 5year proposal is prioritizing is seeing explosion in compensation and opportunities when cracked down sectors of soft sci aren't. In which case Xi and his friends come over and give you personal handjobs along with bags of of state subsidies.
Or as if sexual harassment meaningfully impacts competitiveness US business enviroment. Or that sports star is a business leader now? That's like saying kpop / jp idols / hollywood will fail because you can fuck your way to success. As if fucking way to top is CCP exclusive trick.
The fact of the matter remains, more high skilled PRC nationals are staying or returning to PRC than ever to work in well compensated PRC industries where there aren't bamboo ceilings and with recent developments like China initiative, less targetted political prosecution. At least in PRC you get fucked for doing too well, and raped to get ahead, vs in US where PRC nationals are increasingly being fucked and kept down due to whims of domestic politics. Again, PRC is so alluring for Chinese Americans that US has to literally sanction and start kangaroo courts to scare folks from working in China.
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.
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.
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
So what the US companies get in the bargain with the US Government to offset their lost revenues due to this measure seems unclear.
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.