Beijing criticises Netherlands’ move to block ASML exports to China
reuters.com
reuters.com
China is on a different scale, but still the losses are asymmetrical, at least relatively speaking.
But if you take into account social and other freedoms boosting China (and Russia) does not help the average Westerner as their freedoms would tend to reduce to mach China.
China wants ensure control over strategic elements anyway. I suspect that the west has started betting on China intending to primarily rely on domestic production. Possibly to preempt the future, avoid companies getting entangled further, and slow China down even if just marginally, the west has settled this policy. I say west but this is more a US thing, Europe was more reluctant to follow it.
Where is the line between the "capitalist market" and the government in China?
The mandated fraction of Chinese software vs. other software is already supposed to be >65%, and the floor is being raised every year.
This is already happening. It doesn't take a brilliant mind to see the global supply chain isn't dependable (case in point, this license revocation).
But don't underestimate the difficulty in building these machines.
Well, now they’re forced to use them, and they’re growing.
With the fabs available to them they can’t produce latest gen very few nanometer dies, but for a lot of use cases that doesn’t matter.
And of course, I’m sure they’ve got too people working on catching up. China graduates more engineers in a year than the United States has total.
Imagine if you banned Western countries from exporting cars to Japan in 1950.
The West has IP laws to incentivise R&D by the free market. In China, IP law enforcement is hit-and-miss. Small entities risk having their research getting used by others for free so it would be up to big entities that are well-connected to the centers of power to do the R&D. Research done by a few big entities in a centralized manner may not foster much innovation.
So maybe it boils down to how well they can spy or poach talent or knowledgeable people from Western companies, or maybe reverse-engineer Western products.
Not only are there persistent allegations of state-organized economic espionage and theft of intellectual property in violation of international trade agreements, it is not just limited to business. Academia and government also.
Chinese firms have been able to spend more on production, undercutting competitors, by skipping costly R&D because of IP theft.
Source: https://en.wikipedia.org/wiki/Allegations_of_intellectual_pr...
In July, the OECD halted publication of China's science statistics citing "anomalies". Source: https://sciencebusiness.net/news/international-news/puzzle-s...
These anomalous statistics give us a small and partial peek into how much China claims to be spending on R&D vs. actual. There could be multiple interpretations of the anomalous R&D statistics, but it would be consistent with the allegations that China's explicit strategy is to steal IP to bolster local companies so that they can compete on the global scale.
Without these sanctions, China will likely soon develop chip design talent that's at the cutting edge, but they'll fab with TSMC (and thus use the entire Western-dependant supply chain). This means that China's chip manufacturing ecosystem will remain poor, unpopular and underdeveloped.
With these sanctions, China's chip design talent can't fab cutting edge chips. But China's manufacturing ecosystem suddenly gets the market incentive to develop. I don't think they will reach EUV any time soon, and that hurts. But dominating the mature chip manufacturing sector in the mid term is an achievable goal, and mature chips are still absolutely essential even if they're not "sexy". Whereas before sanctions, there was no way they could dominate in chip manufacturing (nobody wanted to fab with Chinese manufacturers or wanted to buy Chinese chip manufacturing equipment), only in chip design.
What these sanctions did was trading one thing (cutting-edge chip design) for the other (mature chip manufacturing). The short-term blow to China sounds sexy, but they've created a long-term problem. Is this trade worth it? I wonder whether policymakers even realize they're making this trade.
Xi's aim is to reunify Taiwan with the mainland sometime in the 2020s. The US is trying to deter that using a comprehensive deterrence strategy - military, diplomatic, economic. Hence new US bases in northern Philippines, US supporting Japan in changing its constitution to enable more military buildup, US increasing arms sales to Taiwan, US SSBN publicly docking in Korea, AUKUS, Quad, improved diplomatic relations with India, general derisking/decoupling and relocating of supply chains to Vietnam, Mexico, India, etc.
The ASML and Nvidia bans are just a part of an overall comprehensive delay and deterrence strategy, primarily aimed at thwarting Chinese ability to deploy advanced AI in the near term that could be useful in an attack on Taiwan and potential war vs the US & allies in the next few years.
Yes it does incentivize the Chinese to more quickly develop indigenous advanced chip manufacturing capabilities, but that was happening anyway and everyone including the US knows it can't be stopped at this point. But it's about throwing as many wrenches into Xi's invasion plans and 2020s timeline as possible, and this is just one of many.
Do you have a source on that?
> AUKUS
The one that is supposed to result in submarines getting delivered sometime in the 2030s at the earliest? Hardly relevant for the 20s.
There are specific provisions in AUKUS for AI & other technology partnerships.
Xi himself, as recently as just last week, centering reunification in his New Year's speech [0]
Delaying China is absolutely critical for democracies to remain globally viable. The fundamental principle is that any person or country who wants to remain self-determining must be better armed, prepared, and able to fight than the local bully or global authoritarian; if not, they'll take your lunch and democracy every time. With Russia, supported by China [1], we are already far past a new Cold War and into a Hot War with the autocracies.
The better defense capabilities of the democracies rely on the concept of "Defense Offset", which is basically maintaining a technological advantage so that a numerically much smaller military can prevail against a numerically superior military (e.g., US mil 2019 total size 1.388MM [2], vs China 2.535MM [3]).
This military advantage, since at least the late 1960s, has relied on advantage in microchip technology.
When the first Cold War ended after the collapse of the Soviet Union, the Grand Experiment was tried. The idea was that free flow of economic benefits and information would inevitably lead to open and democratic societies. Sadly the generous experiment failed miserably — all it did was further empower the dictators. Now, Russia is attempting to regain all it's territory back to 1917, and China is continuing it's expansionist ways. This is because they now have significantly closed the technology gap to the point where even Iran is contributing significantly to Russia's war on Europe with the Shaheed drones, using a lot of off-the-shelf technology, and Ukraine is significantly bolstering it's defense with FPV drones.
So, even if China does eventually manage to catch up (which is unlikely considering how many insanely complex and globally-non-China-sourced technologies go into one $450MM ASML chip lithography machine), the key is to delay CCP sufficiently that we can extricate them from the democracies' supply chains and maintain a sufficient military offset to defend democracy around the world.
We are starting very late, so this is truly critical, unless we are OK with us and our descendants living under a regime like CCP or Putin.
[0] https://www.bbc.com/news/world-asia-china-67855477
[1] https://www.voiceofeurope.com/chinas-advanced-machine-tool-e...
[2] https://www.macrotrends.net/countries/USA/united-states/mili...
[3] https://www.macrotrends.net/countries/CHN/china/military-arm...
Xi Jinping's own words. He continues to say publicly that China and Taiwan will be reunified, most recently at his meeting with Biden in SF and then again in his new years speech a few days ago. https://news.ycombinator.com/item?id=38828960
He has been saying that for a decade without equivocation or ambiguity. If we take him at his word, then the optimal time for Xi to do it is in the 2020s, 1) while the US Navy is at its weakest since the Cold War, 2) China has the demographics and economic strength for a war, 3) while Xi Jinping is young and fit enough to handle a war, and 4) the US president is either aging Biden, chaotic Trump, or incompetent Kamala.
Xi has instructed the PLA/N/AF to be fully modernized and mission capable by its 100yr anniversary in 2027, and they are on the largest fastest military buildup since Germany in the 1930s. They're also acting belligerent and aggressive toward Taiwan, other neighbors in the South China Sea, and vs India on their border. We've seen this behavior and mentality in dictatorships before and know where it leads.
> Hardly relevant for the 20s.
The announcement is diplomatically relevant now, even if not militarily relevant till the 2030s. It's part of a package of reassuring US allies in the region that the US is committed to defense of its democratic friends and allies there. Without such clear reassurance, some may conclude they have no choice but to pre-emptively concede and capitulate to the CCP on Taiwan, SCS militarization, CCP stealing SCS resources in other countries' exclusive economic zones, etc. This is part of a comprehensive diplomatic/economic/military strategy of preventing that.
China has been saying it for 50 years, so that is just status quo.
Looking at the last 150 years, or even the most recent decades, it's us having a history of invading countries or conducting military operations to support different parties.
Yet, we are so blind of that. China has been mostly on the receiving stick (by European countries as well), not the offending one. Even when it comes to Vietnam or Korea it has been us who meddled in those internal conflicts first by sending troops.
Even when it comes to Taiwan, it's still us who have settled on a policy of ambiguity and defense of a country we legally recognize as a government of the same unique Chinese country, after avoiding to even recognize the PRC for 3 decades.
Even though we keep meddling and deciding the policies of half the world, we still keep demonizing any potential geopolitical entity and we keep pushing everyone in a vassal-attitude due to the unmatched economic, cultural and military power of the US.
Yet countries like China, Russia, and many others, will just never play fiddle to that.
This hawkish paranoia does nothing but further push China to defend its own geopolitical interests and further poke their aggression.
And where we needed a more hawkish paranoia, as in case of Russia, we failed and still keep failing to do so, because Russia has never really been in the economic and financial position to threaten our geopolitical interests to the extent that China can.
The way I see it, western countries and US should take a clear stand about Taiwanese statehood, and Taiwan needs to do it first on their own in order for the rest of the world to take a stand, as they legally still lay claim on the entirety of China (and beyond).
Isn't it ironic that you're accusing others of warmongering, but then suggest an action which would almost certainly provoke a war? (China has been pretty explicit about declaration of sovereignty being their red line)
This tension can only be relieved by de jure integrating Taiwan in Chinese statehood under very huge degrees of autonomy, which no one, let alone Taiwanese people ever trust or by unilateral statehood declaration (which has no support internationally, least of all in US since Taiwan not declaring independent statehood is the entire basis of the US-Taiwan relations act).
You mean like the huge degrees of autonomy Hong Kong enjoys? That seems like such a huge strategic blunder by Xi. Instead of making it a positive example for Taiwan to follow, they made it a strong deterrent to a peaceful integration.
> which has no support internationally
It has no support internationally, because to get that support, you first need to declare sovereignty.
I fully agree with your conclusion and spirit though which is why I said that Taiwan has no reason for any kind of trust for a peaceful integration with the PRC.
https://asia.nikkei.com/Economy/Trade/China-Russia-trade-top...
https://www.politico.eu/article/china-firms-russia-body-armo...
You're suffering of the usual American exceptionalism, where US is allowed to overthrow governments at will, conduct military actions, decide to support whatever side (sometimes arming both), but other countries cannot.
Just to point out, I obviously condone the military actions in Ukraine (especially since I am a Pole of Ukrainian descent), but I obviously also condoned overthrowing Libyan government or the Iraqi military intervention too and many other despicable actions our governments have conducted in the last decades.
I don't want to be too adversarial, but don't you feel a bit hypocritical by supporting Ukraine to preserve its sovereignty in face of a larger, strongly authoritarian neighbor, but arguing for Taiwanese to simply give up their own?
> The way I see it, western countries and US should take a clear stand about Taiwanese statehood, and Taiwan needs to do it first on their own in order for the rest of the world to take a stand, as they legally still lay claim on the entirety of China (and beyond).
and this:
> This tension can only be relieved by de jure integrating Taiwan in Chinese statehood under very huge degrees of autonomy, which no one, let alone Taiwanese people ever trust or by unilateral statehood declaration.
I argue that at some point there is a need for a de jure resolution of the Taiwanese matter or this issue will come again and again.
And, the way I see it, it has been US starting from Bush but most importantly under the hawkish Trump presidency that has made the matter relevant again combined with the Russian invasion of Ukraine.
> I argue that at some point there is a need for a de jure resolution of the Ukrainian matter or this issue will come again and again.
How does that sound to your ears?
Or would you like a 6 month all inclusive holiday in a Uyghur re-education camp?
Or would you prefer an island getaway? There’s a few brand new ones in South East Asia the Chinese are building on coral reefs in order to erect military bullying outposts and exert pressure on small SEA countries.
If you’re from a developing nation you can finance jyour corrupt infrastructure project with the Chinese and have some of your key infra under their control while you sink the country into unpayable debt.
I'm not warmongering. I'm not calling for war. I'm just observing reality and describing it.
> Looking at the last 150 years, or even the most recent decades, it's us having a history of invading countries or conducting military operations to support different parties.
I'm aware of much that, from Smedly Butler's "War is a Racket", to the CIA's disastrous interventions in Iran, Chile, and other countries, to the more recent endless wars of pre-emptive regime change against rogue states aspiring to become nuclear powers. But conversely, defending existing democracies against being overrun by authoritarian dictatorships is not that. One can be against the former and for the latter.
>The way I see it, western countries and US should take a clear stand about Taiwanese statehood, and Taiwan needs to do it first on their own in order for the rest of the world to take a stand, as they legally still lay claim on the entirety of China (and beyond).
Both conceding Taiwan to the CCP, and supporting a Taiwanese declaration of independence, would lead to bad outcomes from the US point of view. Conceding could embolden the CCP to push further, toward the other small countries in ASEAN, or Mongolia, etc. Appeasement of dictatorships has been known to lead to that outcome, especially ones already acting belligerent and hostile to their other neighbors. Conversely, formal independence for Taiwan is the CCP's red line and would certainly result in war.
What the US chose instead was to publicly support the "One China" policy so as not to embarrass the CCP or cause loss of face, which is important over there, while also supporting Taiwan's defacto independence (and, I suspect, privately communicating that an attack on Taiwan would not be acceptable). After formally switching recognition to the CCP in 1971, this was the only realistic policy position for the US to take. One could argue against formally switching recognition, but after that was done, ambiguity over Taiwan was the only option.
It isn't just Foundry or ASML either, it is across every single component sub sector. From NAND, DRAM, LCD Panel to OLED etc.
And Apple is behind it, "lifting" ( as they would like to call it ) every single one of these manufacture. Something no one likes to mention or continue to be ignored.
By the time the Chinese catch up (if ever) the next generation of chip development will be coming online such as High NA and we are even starting to experiment with XRay lithography.
Pouring billions in the sector highly increases the chances of breakthrough technologies.
I personally think more competition in the space is good for everyone, albeit I'm not a fan of those trade wars, they accomplish little at the end of the day and they are funded with a lot of our taxes, we talking hundreds of euros/dollars per citizen for many years to subsidize this trade war we have little to gain from.
China will still get ASML equipment eventually if they will really want to by buying it from intermediate sources that may hide the operation for the right amount of $. China will be further motivated to reverse engineer the solutions and not share their own advancements in the sector if accomplished.
5nm has also been achieved on their own, albeit the yields are not enough for mass production till 2024 and it doesn't uses EUV litography.
It uses DUV rather than EUV, thus it theoretically require many more steps and thus lead to lower yields.
Yes, we shall see. An awful lot of those giant leaps were extremely dependent on technology that was either systematically forced to hand over from democratic countries, or outright stolen by espionage (see their fighter jet vs F35, and some sub technologies).
Have the Chinese managed to reach critical mass of knowledge to continue to advance? Time will tell. But, if Russia is an indicator, even leadership in some areas will slow, stagnate, then become dependent on outside sources [0]. Notice also that Russia is dependent on outside sources even for CNC machines, in which it used to lead, with China's exports increasing 10X after Ukraine invasion [1].
[0] https://www.bloomberg.com/news/articles/2022-08-08/russian-w...
[1] https://www.voiceofeurope.com/chinas-advanced-machine-tool-e...
Here we go again. A little bit of reading here[0] and here[1].
[0]https://www.history.com/news/industrial-revolution-spies-eur... [1]https://en.wikipedia.org/wiki/List_of_Chinese_inventions
Nonsense. No one denies your list of pages of Chinese inventions from prehistoric, ancient and imperial periods. No one is saying that the Chinese are some kind of inferior race or incapable of invention.
The present question is what can their society do NOW? Especially considering 1) Mao murdered & starved millions, w/strong emphasis on killing of "elites" and "educated" people in the "Great Leap Forward", which impairs their technological ability 2) China suffer a lot from brain drain to the west, and 3) they are an authoritarian society which has some inherent advantages (e.g., they can put a massive budget on Project X within days, and they can provide consistent funding over decades, vs the constant sea-saw we get in congress so NASA, NSF, etc. don't know their budget from one year to the next) and many disadvantages inherent in authoritarianism.
With those factors, and the current state of their economy, can they go it alone and maintain their aggressive expansionist policies?
I was purely answering to your issue with Chinese industrial espionage. You only mentioned their inventions and simply ignored the other link which shows Chinese are no different than others in terms of industrial espionage and stealing.
One could say that the Chinese are world-champion innovators in the area of industrial espionage, both in the effort they put into it and the results.
The question is: now that this source of knowledge is being restricted, have they reached a point where they can 'reach escape velocity' mostly on their own?
I think it is an open question. I hope not, because that will mean effectively another 'end of history'[1], except with authoritarian states dominating.
[0] see https://www.amazon.com/Chip-War-Worlds-Critical-Technology-e...
[1] https://en.wikipedia.org/wiki/The_End_of_History_and_the_Las...
If these are so beneficial, why didn't China / Russia institute this kind of import/export restrictions on their own? It sounds like cheap propaganda ...
they will anyway but at least they'll have less opportunity to "obtain" technology from ASML to aid them in their efforts
Most of the manufacturing capabilities of the US has completely shifted over to china. So there would be damage to everyone now. I'm just asking about the extent of the damage. Is survival possible?
Also I'm not saying ban all trade. Just ban all trade with the US. This would be the retaliatory tactic as that's where the pressure is coming from as china is directly challenging the US for the top spot in the economic hierarchy.
Pardon my ignorance. Why would China make that exception? Is Hong Kong a more important trading centre than (say) Shanghai?
You know this, but a lot of people are just behind on the current economic reality. Not surprising given the speed at which china moves.
Compare Pudong (or Beijing, or any PRC city) airport to HK airport. You can tell the commercial activity between each is on a different level, and that's just an analogy for how things work in China.
Or maybe I'm overlooking something, I'm no macroeconomic strategist, just someone who was taught in high school that we learned from previous walled economies
No military implications, huh? Just anti-China virtue signaling?
What are the consequences you speak of? The entire point is "they can't make fast chips for a few years"; we are preparing for confrontation.
Because the Taiwanese government paid for it to be there in the 80's
This amuses me greatly. I had no idea China is explicitly pro-market capitalism.
It blinds people to the obvious fact that the US is heavily using anti free market tactics to end globalism while China is not acting as the aggressor here.
Trying to appeal to some higher ideal of "free market" between countries is just silly. Did China and EU sign a comprehensive free trade agreement when I was asleep? (as Netherlands is an EU country and all cross border trade lawmaking is offloaded to the EU). If not, they really should just shut up.
There of course exists a World Trade Organisation which is like a treaty that essentially says "we're not going to engage in targeted regulation", but it has caveats "unless it has to do with national security" and few other things. So it's really a framework to facilitate trade rather than a global free market.
Tell that to the US and Americans that don't shut up about it any time a country other than theirs does something even vaguely protectionist. It will never not be funny that Boeing pushed Bombardier over the edge with protectionist tariffs over state subsidies while simultaneously suing Airbus for getting state subsidies while simultaneously getting billions of state subsidies themselves.
China generally speaking is very free from a business/trade perspective, the exceptions to that are mostly related to finance or national security sensitive industries.
I would say the Chinese aspire to be more on the EU-esq end of the regulation spectrum than the US though. So over time they are trending towards more regulation even as they open up areas that were traditionally SOE only to private enterprise.
Yes, those things are off limits. Now, how do you define what's finance or national security? Whatever they need to control (the US does this too).
All of these "China is a free market" comments are funny; their capital markets are closed, you can't freely move money in and out without government permission.
Japan attacked because they were running out of fuel and had to act quickly (either strike, or back down in China which they didn't want to). Without an embargo, they would have just continued their war in China.
US can even invade any other country tomorrow. There are risks everywhere, every country has to evaluate "Do I need to insure myself against US invasion / asset freeze in the next 5 years? How much will such insurance cost?". Unless you plan to invade your neighbor, the chances of such events are pretty low and the cost of insurance usually does not outweigh the benefits.
RMB is simply only limited convertible, it is not freely convertible like CHF, EUD, AUD, USD, JPY, etc...it isn't very useful for trade, and even the Chinese will convert to dollars and use the American financial system because the Chinese system is so limited.
Who are "the Russians"? The party elites who invaded another country on a whim? Their relatives and cozy oligarch friends with yachts and London flats? The residents of Russia who pay taxes and finance the war?
As a Russian not in those categories I did and do business with US companies/freelancing platforms (except for a few specific ones like Github) and my meagre assets are OK. Even if I was back in Russia I would be able to get my funds out until I get suspended
That the state reserves the right to interfere as it sees fit doesn’t make it not capitalist. Unless the current chip war is evidence of America being not capitalist.
This is what differentiates capitalism (US, Europe etc) from authoritarianism (China) or mafia run states(Russia).
For example the recent real estate bubble pop was intentional. They've recognized for a decade that the real estate market is dysfunctional and that people shouldn't invest all their money into a rent-seeking unproductive dead-end. Instead, they want the market to redirect their money to advanced technology like advanced manufacturing, semiconductors, AI, etc. And that's happening now.
It won't fucking work. Sanctions only work when targeted against weak countries, where they can have a devastating impact. Against a country like China, they just protect nascent industries. Yeah, profits are gonna suck for a while, investors are screaming bloody murder, but in countries like China, they don't care as much about what their wall street thinks, and investors understand that they sometimes are going to lose, something which became anathema in the west.
We are not in heydays of early 2000's globalism. Nation-States are not going anywhere and strategical national concerns became fashionable again. No force can stop it.
What is the US going to do? preemptively attack china? Have anyone thought about the logistical nightmare this entails? the fucking tragedy for supply chains and global commerce? How exactly the US thinks it is going to send a naval expeditionary force to south china sea? How those nice and expensive carrier groups pretend to survive the barrage of missiles, especially hypersonic ones? And then what? Hunker down in Taiwan while engaging in a decades long attrition war against China. Turning ourselves into a war economy so we can produce the mind-boggling amounts of ammo this would entails? and then to defend exactly what? the sacred ruins of bombed TSMC factories? Does those morons in the Pentagon and the State Department ever heard about the fact that wars cost money, and attrition wars even more, and that printing money by itself is not enough, because digits on a computer don't win wars, but raw steel, diesel and chips do?
The only way of dealing with China is keeping them dependent on western technology, leveraging the west's advantage not only in lithography, but also on optics and software to ensure that there's no economical way for them to develop a competing industry, simply because there will be no reason for China's industrial behemoths to shoot themselves on the foot by buying native chip technology that is worse and more expensive.