a lot earlier than ppl think, and there are a lot of room to innovate on transistor structure as well even using existing litho machines
511 karma · joined January 7, 2020
Before USA's trade war, 99% of CN companies, even the state owned firms, believe in 造不如买make your own is not as good as buying. Most purchase decisions is based on market forces, better product, more reputation, competitive priced = deal. Its really hard for Chinese companies in chips, semi equipment, etc to break into the market. Say you want to compete with TI in microcontrollers, nobody wants to buy from you when they have mature products from TI.
Now, the USA with export bans and its own subsidies, single handedly destroyed the "make your own is not as good as buying" mentality. Every company in every sector now has to worry, if I buy a microcontroller from TI for my toaster, what if Washington have a mental break down tomorrow and decide to ban it with a stroke of pen. Even if my alternative isn't as good, I won't have a business. And as companies starting using alternatives, that product gets better with feedback loop and iteration. Rome isn't build in a day, but it's built by human hands. Once a product starts the commercial cycle, it improves. People believed that US sanctions only targets selected companies, then Oct 2023 GPU ban targets the entire country, every single company. Now even a game streaming company can't buy the GPU they want. What do you think companies with 10B dollars of revenue streaming video games are going to do? Invest in every single semi-conductor companies in the entire supply chain, from GPU, to EDA, to semi-tools. USA is attacking huge sectors of CN economy, sectors with revenues of hundreds of billions of dollars, making an enemy out of all them, what do you think they will respond? The demand is still there, people will still buy their toaster, watch livestreamed video games, companies will need to operate, and the supplies are needed. Whoever can fill that demand laughs to the bank.
The trade blockade strategy might work for smaller countries. But 1) China has always been many forms of trade blockade ever since the country is founded. See wassenaar arrangement. China can't get advanced machine tools, EDA, CAD, and many others. So there are many small companies, research labs, SOEs, universities that have been doing R&D on these tech for decades. The problem is products in these areas have very strong winner takes all effect, they don't have marketplace battle tested products. But the flip side is that they have talents, they have some IP, know how and tech. Chinese semi tools companies are rapidly advancing in the last 6 years, but they started 20 years ago because the west's sanctions on China. So when US wages the tech blockade, Chinese don't start from scratch, they take what they have in the lab, not mature, but have some value, and start putting it on production lines and iterate. 2) CN has a large internal market, and increasingly competitive in global markets for all kinds of goods, even if the entire western world stops buying from China, the rest of world + internal market is big enough for many products to be profitable and iterate. As long as there is demand, there will be people study and making it. 3) CN has surplus of university grads, many universities, etc, what if we find them some work to do?
Oh and the reason why CN has been doing self-sufficiency is because the country has always been sanctioned since its founding. And western decades of western sanctions have created CN's R&D industrial base in "hard tech", such as materials, automation, industrial software, optronics etc. I guess many policy experts forgot this fact and never bothered to study what really goes on in China. They forgot they have been sanctioning CN for decades and the Chinese have always thought they can't rely on others. Why do you think they can trust you when you sanction and attack them? The self-reliance mentality is created by western sanctions. The solution is always build trust and remove the rational that causes others to think a certain way.
- Increasing competition from Chinese firms
- US waging sanctions and trade ban tech war, and the SK firms following US trade restrictions voluntarily or involuntarily. This has made nearly all Chinese sectors examine their supply chain for tech and goods that might be banned by a stroke of pen from Washington and switching to more reliable alternatives. This has the surprising effect of improving competitiveness of many Chinese firms, especially in the areas SK firms are good at. Leading to more number 2
So, yes, Chinese government give the same subsidies for Tesla. What does Chinese companies get in the USA? The most discriminatory and certainly illegal rule that is IRA under WTO. IRA subsides are barred legally from giving to companies, not just headquartered in China, but also any Chinese origin entity or any entity in the world that holds 25% more shares, and regardless where the product is made. And not just for end product, any materials, components made by Chinese entities or any entities in the world where Chinese entity holds 25% share regardless where it's made. Does your South Korean anode company board have a Chinese national and Chinese entity invested in your company? You are dead. For that Chinese board member, he/she is forced to resign, for the Chinese investment, is forced to be sold. It's the most discriminatory trade rule ever made. Then there is all the fearmongering, consistent witch hunt against Chinese origin companies and entrepreneurs by the government and congress. It's not even against a company anymore, it's against the entrepreneurs, the founders who got a Chinese name. Anything that has Chinese name in it, you get roasted, shamed, defamed, treated like cockroaches by people in congress. Right now, if you are Chinese person, want work on semiconductors, telecom, batteries, AI, mobile phone apps, internet, biotech, regardless where you are based, US government will defame you, wants everyone in the world to shun you off, to treat you like cockroaches. See what happened to tusimple, Zoom, G42.ai, or so many companies that I can't list here? On a tangent, Shou Chew was in congress and members of congress continued to shame his Singaporean nationality, not even aware Singaporean and Chinese are different. In China, Tesla and Elon Muskc got big publicity and essentially "encourage you to buy" message from the government. What does Chinese entrepreneurs get in the USA? I am using strong language, but this is the truth. No need to suger coat this.
And for Huawei, funny before the USA's witch hunt against Huawei, Chinese telecoms were buying from Ericsson, Nokia, Cisco en mass. And now god forbid we support our own companies when USA, and it coerces other countries to trying to just blatantly kill off Huawei, chop off its head. Huawei may sound like same name to you, but for us its 100K workers and families, who have kids to feed, grandparents to take care of. Then millions of people dependent on Huawei's supply chain, sales networks, service centers. It's one thing if a company doesn't innovate and got out competed in the market. It's totally another when a foreign government attacks the company with the goal of completely chopping its head off. Fair competition is fine, but only when the environment is fair. I am gladly buy an iphone if is better than huawei if they are on level playing field. But right now, I will gladly buy a mate 60 pro even if its weaker than iphone. Western media play up all Chinese people are super nationalistic blah blah. It's foreign governments that is attacking our people and families that is making people more nationalistic. US government has sanctioned more than 1000 Chinese entities, trade war, tech war, 10s of millions of people are directly or indirectly affected by US government. There is a joke on Chinese internet now that when US sanctions a Chinese company it's a stamp of approval. By the way, no one has accelerated Chinese domestic semiconductor supply chain faster than US sanctions. No one has promoted Chinese people to buy Chinese products better than foreign governments. Huawei essentially got a martyred brand image after the USA's treatment, the struggle to survive against all odds, what doesn't kill you makes you stronger, the Independence Day story.
Think what goes into a hair dryer? Exterior design, looks good and functional. How you make the plastic cover, do the plastic injection molding? How you design all the internal parts, fan, motor housing, heating wire, power circuits, micro-controllers etc, and make sure everything fits. Some companies even do individual components themselves, like the brushless motor, or there is a Chinese supplier that makes them, which provides much faster time to response. Then do the testing for each component, electric, heat, water, moisture testing. Then design a mass manufacturing system with automation and human labor that achieves really high yield and low wasted materials. This is the hardest part, its easy to make a hair dryer by hand taking 100 human hours and make sure it works. It's much harder to make 1M hair dryers per month, that is going to be used in all sorts of environments and with all kind of abuse, make sure they work well for a number of years so customers don't return them, or you go bankrupt from recalls and warranty, and make sure you only have to throw out the absolute smallest number of manufacturing defects, and really control your cost structure so you still make a profit when importers are squeezing your price. Then the supply chain and logistics, shipping from suppliers and shipping to customers. Then create a number of products for different markets. China can manufacture for cheap, but people don't realize manufacture for cheap and at massive quantities is a technology itself. It's also management, business process, even company and worker culture. China doesn't have the cheapest labor cost. It's the combination of everything that produces a physical product with the level of quality, fit and finish at the price point.
https://loongson.github.io/LoongArch-Documentation/LoongArch...
All other activities are fine, and specific areas basically are real tech are very much supported, eg, semi, semi equipment, chip design, EDA, etc. Chinese gov are saying instead of thousands of smartest phds trying to figure out how to play financial games, get them to build the lithography machine, cuz the latter creates real economic value.
- Solar panels smaller in area than ISS but produces similar amount of power, indicating much more efficient solar panels
- Ion thrusters to keep space in orbit
- Automated docking of cargo and crew capsule. Semi-automated docking of large station components like the 23ton labs
- A robotic arm similar to ISS that walk along the joint points on the station. It has expandable attachment system, allowing not only astronauts to attach, but also a smaller more precises robotic arm to attach that can manipulate external experiments.
- It has a crew airlock and a cargo airlock, the cargo one is larger than the one on ISS.
- It can also release small satellites through the cargo airlock.
- Dozens of external experiment attachment points, some (maybe all) has power and control
- What looks like pretty good communication links with the ground. Experiments can be controlled and monitored from the ground, saving astronaut time.
- What looks like some advanced experiment equipment, including three very accurate atomic clocks, near absolute zero cooling systems etc. But I am not well versed in physics to speak on these.
- It will operate a space telescope; telescope can dock with the station for servicing and upgrades, and equipment uploaded by regular space station cargo ship.
I think it is a well-designed system, surprisingly capable in terms of research capabilities. As China's space industry is completely sanctioned by US and Wassenaar Arrangement, all technology here are from Chinese industries and local supply chains: materials, precision manufacturing, communication equipment, sensors used for guidance/automated docking, robotic arm, ion thrusters, solar panels, networking and control system within the station, even to the logistic system of building, launching and running the station. Then there is the whole rocket system themselves, 100% success rate thus far with CZ-5/B, CZ-7 cargo ship, and Shenzhou launch vehicle. And then the global positioning and communications satellite network. And then there is the whole research equipment part. There are millions+ ppl involved in all of the projects here.
Other state banks are also doing sanctions: Stopping financing for purchases of Russian commodities. Complying with western sanctions. Reducing compliance risks
It is a fact, today, go to streets of many cities and towns in xinjiang, Kashgar, Urumqi, Aksu, you will see kids running around on the streets, speaking in Ughur, Kazakh. Many Uyghur kids speak Uyghur among themselves. You will see cities signs in both Uyghur and mandarin. If Chinese government really have these "boarding schools" to completely ban minority languages, why would kids still speak them on the streets? Why would you have Uyghur on street signs!
If these schools, kids are treated "heads were shaved and that class monitors and teachers frequently hit them", why would you still see Uyghur kids runing on the street, playing, and look happy??
The fact is this, all schools in Xinjiang will teach Manderian and Uyghur. Schools will also have many classes on Uyghur cultures. Here is a interview at a school in xinjiang https://www.youtube.com/watch?v=c-H49vUhPDg&ab_channel=%E9%B...
There are 20 Million Uyghur people in China. If Chinese government's treatment of Uyghur children at schools is "shaving their heads and teachers beating them", I would think everyone will revolt and try to escape the country. Yet, why would over 20 million Uyghur people still live in xinjiang, seems to be fine with sending their kids to school?
The reason why China has boarding schools is people live far from the school. Often in less populated locations like xinjiang have to travel for hours for a school that is properly funded and staffed. But it's parents decision to have their kids to stay at the school or not. I went to boarding school myself. My parents pick me up on weekends. I actually loved my time at boarding school, it was great to get away from my parents and hang out with friends all day.
And reading through the article, many questionable lines jump out.
"Teachers came by for a mandatory bed inspection before the children could line up for breakfast, usually corn or rice porridge.", Not even Chinese prisons serve this stuff as punishment. Who would be willingly do this to kids even if this was prescribed by government? The people running the schools are humans too. You think that hundreds of thousands of school staff will do this to kids? shave their heads, commit the other physical and mental abuses at kids mentioned in this article? Only a sick, psychotic, out right crazy person would do that. I don't know about you, but as a Chinese, in my whole life, the Chinese people I know do have compassion. I can say that when it comes to kids, we do love kids. Sure, Chinese parents and teachers do punish children. But that is because people believe punishment is needed to educate kids, to make children grow up into better person. But deep down and bottom line is, people still adore and love kids, want to protect kids. Hey, regardless of everything else, Chinese people are human. And all humans do have hearts. And all humans are more like each other than their are different.
And now, even the culture of punishing kids are changing. Recently, Chinese government banned all manners of punishment from schools. Teachers caught doing so are being fired. If what is described here is true, the parents can sue the teacher and the school. They will win the suit and even get reimbursements.
"She made the children laghman, Uyghur-style noodles, and Aysu cried. She was served Uyghur food only twice while she was at the state boarding school, but both times older classmates ate it all before she could take a bite." - seems like the article is claiming the school tried to reduce exposure to Uyghur food to rid off kids cultural connection Uyghur. Go to Xinjiang, and you will see Uyghur restaurants everywhere. If the government is trying to ban Uyghur culture and banning food is a way to do that, why would they allow so many Uyghur restaurants running freely? Also, a Uyghur person doesn't need to flee to Turkey to get Uyghur food, they are available everywhere in xinjiang, all run by Uyghur people themselves, freely. Yes, Uyghur people are free to open their restaurants, open businesses, why would they be go to forced labor at factories?
“The children said they were taught in only Mandarin Chinese for six days a week, and students who spoke without permission or spoke Uyghur were hit with rulers” - again, if the schools is mandated by the government to ban and punish kids from speaking mother tongue, why would you see kids and adult alike on the streets walking freely and speak Uyghur?
Also, if the father in the story is on Chinese government's radar, and Chinese government arrested his children, sent them and punished them at state boarding school, physically and mentally punish them, why would Chinese government still allow him and his children to leave the country? So they could go aboard, speak to the media, publicize these "atrocities", and get international sanctions and punishment on China? So the only explanation is that Chinese government didn't specially target them. At worst, the children were treated like any other children. If a lot of children were treated like this in xinjiang, then how do you explain the free-running, Uyghur speaking kids on the streets?
Also, Uyghur people are in all walks of life in China right now. For example, many top actors and actresses are Uyghur, like Dilraba Dilmurat. What are presented in these stories are truly terrible, from treatment of kids, 1 million imprisioned, to so-called forced labor and forced sterilization. I am sure everyone will able to sympathize and everyone will revolt if they see these happening in front of them. But 20 million Uyghur people still live in China today, they seems to be okay with the lives they are living. We don't see massive uprising in xinjiang or exodus of refugees. Doesn't that contradict even a slight bit to the narrative presented?
Trust goes both ways, and it takes effort from both parties to build trust. This kind of actions will only been seen as aggressive and ill intent by the other party, and when there is lack of trust between two parties, the other will come up with defensive and offensive counter measure to protect themselves. And that doesn't help when one party has got an active military branch named space force.
Looks like the space arms race and militarization of space will only escalate in the future. I hope people will realize, like the nuclear arms race before, this kind of wild west arms race is unsustainable for everyone involved, and for humanity as a whole. I hope leaders from all countries involved to have the courage and consideration for all of humanity and our collective peaceful use of space, to put geopolitics aside, to come up rules of responsible use and engagement in space.
https://breakingdefense.com/2021/10/us-china-russia-test-new...
Here is my perspective as a Chinese national. I agree the peng shuai case is terrible and I support WTA actions. But I also realize how much Chinese government's actions have transformed people's lives in the country for much much better.
I wonder if you have knowledge of the culture, history and the perspectives from the Chinese side. Have you ever seen a video of Chinese people 1930s, learn about what the society was like back then? For the average Chinese, you are a peasant, you slave at the fields for the rest of your life. You will not learn to read, only the elites learn how to read. If you are a women, your best bet is to arrange marry to a rich family, your foot is most likely bounded, you will be a housewife, you will give birth to kids, and you will give birth to boys, if you can't, you will be seen as a failure by the family you marry into. Did I mention the rich and elite men will have multiple wives and mistresses? Women going out to work? Having money? No way. Parents want boys not girls. But you can't blame them, there is no social status for women back then.
My grandma was a typical women from the 1930s, farmer, arrange marriage, never taught in reading and writing because there was no need, foot bound. After the ccp and PRC was formed, the local party branch gathered all the women in her village and taught them how to read, how to farm like men, how to work in factories like men, how to tell their husband to fuck off and how to fight them if they beat them. The ccp propaganda that people outside of the country are "disgusted" by were telling people women can hold half the sky, women can do anything men can do. Women are equal to men. Marriage require consent of two the man and the woman, and only themselves have the right to make the decision. And men having multiple wives were made illegal, and under ground practice were heavily sanctioned.
Women's social status today in China is massively different. Some guys I know say girls are so lucky, because guys are suppose to serve the girl, guys should earn most of the money in the home, husband should hand all the money to the wife, should never pick a quarrel with wife, etc.
SCMP reported that China has two-thirds of top women billionaires. Chinese females also do very well in sports. In Tokyo Olympics 38 golden were won by women vs 13 by men.
And of course I know the difficulty still facing women today. Sexual assaults, verbal harassments, discrimination in some work places, domestic harassments and violence. The good thing is these issues are being talked about in the media and on the internet. Very frequently you hear about court cases involving women and justice being served. I do believe they are getting better.
I think one of the biggest reason for the change in women's status is Chinese government's education system requires boys and girls to attend 9 years of education. And in school, the vast majority of girls are taught to be the same as guys (sure, I know some teachers do discriminate against girls, but on average). At least in my up bring in China, girls generally do better than guys in school, and my teachers taught to us to respect each other. Almost all girls I grew up with are now working as professionals, none had to drop out of school, or married off and became housewives, all very independent. Most of my guy friends are very respectful of women, I believe owning to correct values and world view established when one is young.
And there are so much more about china. It's complex and multi-faceted
China has a different political system. The political system has done bad things, but also a lot of good things. Poverty alleviation, my dad side came from a poor village, for the past 20 years, I witnessed how much that village transformed. Ability for people to feed themselves, housing, jobs, education, healthcare, safety. A lot of Chinese people won't say this, but it is true that they are direct results of government's actions. People say China has no democracy, but the government is acting on people's demands and giving them their demands.
I want to make a plea with you, forget about political systems for a second, on a personal level, I believe people are more alike than they are different. Chinese people believe in freedom, justice, fairness, rights and the power to make demands and have them be acted upon and becoming the reality. I and many others believe in value of work, creation, and personal effort. I believe there is no free lunch. I believe socialism is not about a disrespect of personal property, it is about the society offering or making an effort in offering equal opportunities to everyone, and attempt to make an leveled playing field.
I also believe in freedom and freedom of expression. Although I have to say I believe freedom is not without limits. Conflict arise when one's freedom conflict with the freedom and wellbeing of the others. In these scenarios, I generally support sacrificing some personal freedom if it means there will be clear benefit for a collective wellbeing. You could have a different ideals, but I am happy to talk about why I think this way and listen to your perspective.
I also want to say the vast majority of news about China is extremely biased and a lot of them are absolutely false. They are about making people hate China, destroy relationships and make people going to war with China. By the looks of it they are doing an excellent job.
One last plea, Japanese in North America were targeted during ww2 due to the war. Nowadays, it feels like Chinese nationals are being treated the same. The issue is not about standing up to particular issue. The issue is about labeling an entire group of people and saying they are evil or against my way of life and my ideals, and thus they should be eliminated, without realizing it's people, humans, on the receiving end of punishment, attacks and destruction. And I think the vast majority of Chinese people and also Chinese government has said this, we don't want to export our ideology, our model. And we want to respect the ideals and values of every other country. We believe its fine for different countries to have different approaches and different takes on various ideals, and they should be able to coexist. We never wanted to replace or change western beliefs.
> Offline account a pro feature: to sell Microsoft accounts, office 365 and onedrive
> Switching default browsers more difficult: to sell Edge and Bing.
> Taskbar is now in the center: to get people to click on icons such as Teams, Microsoft Search, and the new launcher which includes links to Microsoft services like office 365.
All the changes above are not for the benefits of consumers or other business that rely on Windows OS, for example, app developers, partners etc. Microsoft would brand and market them for the benefits of consumers. But at their core, they are about serving Microsoft bottom line. To use the dominate of position of windows OS in the PC(desktop and laptop) market, to push other lines of business from Microsoft. Microsoft have to continue to grow their revenue to justify their market cap right? That is where Microsoft's core interest is and what fundamentally propel them to do. And it shows up in what consumers will end up with, and it's not surprising at all. All that marketing doesn't hide this fact.
And Microsoft will do things slowly, like boiling frogs, slowly so people don't realize. Remember when Windows 10 was launching people expressed concerns about linking Microsoft account to windows and Microsoft replied offline account will always be here? Now they removed it from non-pro edition and calling it "improving our ability to deliver new features to consumers" or "bring consumers more value". Microsoft's strategy is get people to use Microsoft account, so people use other Microsoft services like onedrive and office, and have stronger ties with Microsoft. Now if you want a offline account, you have to fork more money, and a lot of laptop OEMs ship with non-pro version of windows because it's cheaper license. This will deter a lot of people, so people cave in and go with Microsoft's strategy. But in long run, Microsoft will make more money from people with Microsoft accounts than they lost from the cheaper windows non-pro license. The business executives and strategists have all this calculated.
I doubt xiaomi and other Chinese company dares to enable censorship anywhere in international markets, or have a secret plan to control world's information discourse to support ccp. Any censorship or apparent support of ccp will be caught within seconds. Its commercial and political suicide. Also if they do have a secret plan, just blacking out whatever people are typing on their phones is such a dumb, stupid, and crude way of implementing censorship.
Also, this report found no censorship mechanisms on huawei and oneplus phones. Yet they said people should ditch all Chinese phones, which implies all phones originated from Chinese origin companies have censorship mechanisms. That is a much larger conclusion than what the evidence they provided, seem like a politically motivated desire to discredit and defame all Chinese origin companies and products.
I also doubt ccp has a marching order for Chinese companies to censor speech internationally and manipulate world's information discourse. Chinese phones have big market share already, and huawei's gear has wide market share in Europe, but no one ever experienced censorship on their device for speaking against China. And if there is a secret plan to control world's information, they are doing a terrible job at it. The covid origins, xinjiang Uyghurs, Hongkong. The point of view of Chinese side is non existent. For example the xinjiang Uyghur situation, I know people in xinjiang, many of whom are uyghur people, the accusation of mass genocide, 1 million imprisonment, wide spread physical abuse and rapes in prisons, massive internment camps with forced labor is wildly inaccurate from the truth. Yet, it hasn't stopped this from becoming the wildly believed truth, to the point where if you disagree with these statements, you are a ccp shill, a genocide sympathizer and brainwashed. For me and a lot of mainland Chinese people I know, we feel our voices and our personal real life experiences are being censored by international media and public discourse. Sometimes I read something about China in the international discourse, it feels its talking about an alternative universe than my real life experience. I have to wonder who is really controlling the narrative, censoring speech and pushing their political agenda.
I can present my points for supporting each of the regulatory actions but I won't go into details here. Overall, my view is that these regulatory actions are overdue. It doesn't mean we don't want tech sector. The society is a web of relationships between entities. Any time an entity that has a lot of advantage over another party, I argue that the red line should at least be that the more powerful entity shouldn't use its power to the detriment of the weaker party. The role of the government and laws should be to at least be to prevent that from happening. In terms of tech, the relationship is tech company vs its competitors, vs consumers, vs workers. In these relationships, a tech company can have significantly more advantaged because data it collected, characteristics of a digital business, network effects and capital. And if the weaker party is negatively affected because of the interaction between the powerful entity and the power difference, that should be a sign that public power should step in to either protect the weaker party or increase weaker party's power.
In regards to environment. I can list specific actions Chinese government took just recently: 1) A carbon credit and trading system is operational. The first batch of companies required to tally carbon credits and purchase credits include 2000 companies in the power generation sector, covering an emission of 4 billion tons of co2 annually. Steel, metal, cement, petro-chemical sectors will also be included as the plan progresses(https://www.reuters.com/article/china-carbon-market-0714-wed...) 2) Government is ordering more crude steel capacity reduction, can you imagine any country where the government is forcing businesses to reduce production and capacity 3) Aug 1, government removed export tax benefit for 23 types of steel, and placed export tariffs up to 40% on a few types of steel. Does any other country has self imposed export tariffs? The purpose looks like reduce exports of energy heavy, pollution heavy, and low margin metal products. Aiding steel capacity reduction. (http://finance.people.com.cn/n1/2021/0801/c1004-32177024.htm...) 4) Many state owned companies, such as state grid, petrochina now have even more green development tasks and initiatives. For example, more ultra high voltage DC powerlines are being built. This removes one of the primary adoption blocker for more renewables in china. One of the successful development model is villages in the western provinces are building solar farms, the revenue from power sales are dividend given to the local people, increasing renewables at the same time increasing people's income. And some villages in the dessert, have found its even possible to grow plants under solar panel's shade where before the sun was too strong. Now they have agriculture + solar energy development parks. Solar, wind, hydro installation are all increasing. In terms of industry and private sector, EV sales continue to grow, I believe EVs in China, given the quality of the products, market competition and gains in infrastructure, is starting to reach the consumer acceptance. Sales of Chinese companies in green sector, such as CATL is growing by a lot, stocks reaching all time high.
Ant's case: treating Ant like an financial institution. Setting standards on capital requirements, lending standards etc. Perform financial pressure tests similar to banks. Ant lends money, issues ABS, of course they are a financial institution, should subject to the same rules as anyone else. Upside: reduce financial risks, especially if there is economic downturn. If a financial crisis like the 07 crisis happens, the wealthy might be fine, but the middle class people might lose their jobs, their mortgaged house, their retirement investments into companies that are bankrupt. So preventing a financial crisis is protecting people's livelihoods. The government action shows its not afraid to halt a multi-billion dollar IPO to do this.
Alibaba: establishing Alibaba had "dominate position" in E-commerce industry based on market data between 2015 and 2019 and as such, require seller exclusivity is against anti-monopoly law. Upsides: Make this scenario as a precedent, deter future cases from happening. Reduce the dominate player's ability to bend the rules to hinder competition. Allow more choices for sellers, the majority of which are small businesses. Alibaba's seller exclusivity harmed both competition and the sellers.
Tencent: Establishing Tencent's taking majority of controlling stake in 中国音乐集团, resulted in Tencent being dominate position in online music service. It is illegal under anti-monopoly law for not reporting such transaction for review. And by anti-monopoly law, state council can order the entity to take action to reduce its market consolidation. The action ordered is Tencent cannot sign exclusive music licensing with upper stream suppliers. After Tencent's transaction, it signed exclusive music licensing with Warner, Sony and Universal. This has been devastating to competing music services, Netease cloud music, Xiami music, etc. Upside: Establish precedent. Ensure there is room for competition. Good for competitors.
The advisory on Meituan and food delivery platforms: Attempt to address some key public concerns about food delivery platforms. Food delivery workers extremely overworked by delivery platforms, low pay, lack of safety, insurance protection, and practices such as penalizing delivery workers for late deliveries while over stuff them with orders. Upside: good for delivery workers or other gig workers. Also good for companies because the government is not making drastic changes that destroy the fundamentals of their business. Instead, it is issuing a sensible plan of action that are not too costly for the companies. Also calls for them to investigate different approaches to solve delivery workers pain points.
The advisory on K12 education outside of school: This is a lot more controversial. The background is that most Chinese students spent their time outside of school, during weekends and summer break, in some kind of prep classes, it could be English, math, etc. Chinese parents sent their kids to these prep classes hoping their kids can get ahead of others. When I was growing up, as a primary schooler, my Saturday is Violin class, a English class, my Sunday was a math class and a English class. My summer weekday is all English and Math classes. I heard parents would sent their kindergarten kids to prep class teach grade 2 material. The thing is the prep classes is now a huge industry. Prep class companies market to parents and kids, telling them things like you can get ahead others, you need come to us to learn to get good grades to go to university. Parents spent huge amount of money on "out of school" classes. Another issue is, as these "out of school" classes and companies earn a lot of money, they can pay their teachers much more than public school. So good teachers are leaving public schools, resulting in decreasing quality, more kids have to take "outside" classes, creating a vicious cycle, adding to kids time burden and parents financial burden. The most dangerous thing this creates is segregation of education quality based on economic class. Parents with money can send their kids to place with best education resources, while parents without money send their kids to public school with lower education quality. The new k12 education advisory is about trying to return education to its public, universally benefiting nature, reducing the profit seeking tendency. It is also trying to reduce parents and kids access to "out of school" education and strengthen public school education in order to give kids more non-study time. But time will tell the impact of these policies, what are the positives, are the negatives too harmful, and unintended side effects. "advisory" in China are different than laws. They are kind of best effort, are negotiated and discussed about during actual implementation. And these advisories are updated frequently when they need changing. This is a big reform of education scene, if it is successful it will create a more healthy atmosphere for Chinese kids to grow up in and less burden on families.
Ant has China's most dominate online and mobile payment system, alipay. It has consumer lending products like huabei. Ant ties its payment product with lending product, say if you a colleague student buying a $500 shoes on Taobao, you get to the checkout screen, you are like hey $500 is too much for my monthly budget, can't afford this, Alipay then says oh check this out, through Huabei you can get your shoes now only have to pay back a small portion each months. Ant loan money to consumers, then take a bunch of loans lump them together and divide into securities and sell them to other investors, i.e. classic ABS scheme. Ant even says "since we know the consumer spending and payment habits, we have big data algorithm to calculate the rating of the securities and credit score of the consumer". Consumer credit score is supposed to be a check and balance to prevent lending to high risk individuals, security rating allow investors to be confident about the security they are buying. Now Ant financial is the check and balance to itself in both cases.
Through ABS, Ant externalizes all the risk of lending to outside investors. Financial institutions might include Ant's ABS in other securities. A middle class person might buy retirement investments, which have exposure to Ant's ABS. If you own shares of financial institutions that owns Ant's ABS or securities exposed to Ant's ABS, you are also exposed to Ant's ABS. The exposure is everywhere, can't be isolated. From Ant's perspective, they earn a profit from each dollar they lend, so they got all the positives and none the downsides. This could be a reason why Ant lends to consumer who are much riskier than traditional banks in China lends to, and through my experience, riskier than US credit companies lend to. US credit card companies require a stable job, a home or rent, or a dependent with good credit score. Ant lends to colleague students in China that have non of that. Nor do they check the credit rating of the dependent(parent). If the lending goes bust, for example, triggered by an economic down turn, these ABS will drag down everyone exposed to them. Basically how US financial crisis happened, causing suffering 10s of millions of people. The government's action didn't ban Huabei, and Ant. They are just treating Ant as a financial institution, subjecting it the same rules and standards another financial institution (e.g. a bank). The goal is to reduce financial risks. Why is this a bad thing?
The regulators wanted to use existing financial regulation standards, based on Basel Accords, on Ant. But they were on the fence about it because they didn't want to limit a new form of business emerging, or want to limit what a "private" business want to do. But Jack Ma's statement basically called existing financial regulation, and the Basel Accord itself "stupid, out dated, incompetent". In my opinion, that is unacceptable because while Basel accords has its downsides, it's learnings from many financial disasters that caused suffering to millions of people. Its like airplane safety regulations, are they a hassle? yes. But they are there for a reason. And of course a business person will advocate for reducing the rules that limit their ability to earn money, but reducing the rules will increase the risk the entire society will be harmed, especially the under-privileged. A financial crisis triggered by Ant's reckless lending might leave Jack Ma and Ant's executives slightly less wealth, but they sill got all the other cash in the bank. But for a middle class person, the financial crisis will cost them their jobs, their mortgaged home and their retirement savings. And that middle class person didn't do the things that caused the financial disaster in the first place.
Business people will brand their advocacy as something for good, brand things they are against as something old, outdated, cumbersome, use marketing or media power to sway public opinion. Unless you are well versed in financial theory, how can you tell the truth? Most likely that was the final straw. Regulators finally had to gut to required Ant to be regulated as a financial institution similar to a bank. In my opinion, Ant should be regulated like so from the beginning. They lend money, they issue ABS, of course they are a financial institution, subjected to the same rules, same capital requirements like everyone else. Why should they get preferential treatments, not obey by the same rules. The regulators aren't hard liners, they are too weak. They were probably held back by the public opinion about Chinese government is against private industries, so they are afraid to do things that other might say "limit their freedom, hinder private business development, ccp controls private sector etc", including holding business accountable for legitimate reasons. Now these regulators finally have the gut to do the right thing.