So, if at first, or second, or third, or tenth you don’t succeed, try try again. The Netherlands, under heavy pressure, has canceled already approved sales of ASML lithography machines to China.
The leadership of ASML had resisted these sanctions because they said it wouldn’t work: what would happen is that China would learn how to make the machines themselves.
What he didn’t say, but it is true, is that ASML would not just lose the Chinese market, they would eventually lose the world market anywhere that didn’t put high tariffs on China or ban Chinese ASML machines, because when China learns how to make their own they will inevitably be cheaper, and the quality will catch up at some point.
Sanctions work on weak nations. They do not work on strong nations, or on nations which have strong friends. Russia sanctions might have worked if China and India and most of the South had gone along, but since China was never going to let Russia be destroyed, and since Russia produces all the fuel and food and most of the minerals it needs, plus still has a fair bit of advanced and heavy industry, especially arms manufacturing, it was never going to happen.
Sanctions against China are insanity. All they do is accelerate local production.
The thing is that before the sanctions most Chinese majors preferred US or South Korean designed chips. They were considered better and more reliable. Executives would not buy Chinese chips, even when they were available.
But when the US first launched its chip sanctions they were clearly trying to take out Huawei, one of China’s largest companies.
Being reliant on western chips went from the safe choice to the insanely risky choice and China, both private and public, spent vast sums and made huge efforts to build their own chip industry (including lithography machines are alternatives.)
There was a small window to turn this around when Biden was elected, but he doubled down on sanctions.
This needs, I think, some unpacking.
I don’t like to reach for arguments are about racism, but there’s a weird assumption in the Western ruling class that the West is just superior to everyone else: that our technological lead was somehow innate and inevitable and eternal.
Given that China had the tech lead over the entire world for a couple thousand years (or may 1,500 before which it was India or Ancient Greece and before that it was always Mesopotamia or Egypt) this seems strange. Europe took the tech lead for complicated reasons, both China screwing up and European events which were historically contingent and mostly not planned.
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A full discussion is beyond the scope of this article (and fills many many books) but “Why Europe and not China” is its own genre.
But nobody with any sense thought it was because Europeans or those of European descent are innately superior to Chinese.
I’m a broken record on this, but where the industrial base goes, the tech lead goes, at least in the industrial era. Pre-industrial it’s a bit more complicated, but it’s not an awful guideline, the exceptions tend to be transient, but they do exist (the ancient Greeks were insanely advanced) and they tend to occur where there are is a group of constantly competing small nations, which is the over-simplified explanation for European pre-industrial revolution technological advancement and also explains the massive leaps China took during warring states periods.
But if you don’t have a forced competition between near equals who know they can’t sit still or a genuine breakthrough (the industrial revolution) or both, then the more normal processes mean that where the industrial base is, so goes the tech.
Now, sanctions against China would make sense IF and only IF, you were going to take advantage of them immediately. In other words, go to war or make really radical changes to try and re-industrialized.
How radical? Well, my estimate is that if the US wants to re-industrialize it needs to drop housing and rental prices by about two-thirds, and forbid all excess profits on any product which isn’t new, say less than ten years old (and a new model is not new. Smarthone producers should have been allowed to gouge on smartphone prices for ten years after the first iPhone, for example.) No food gouging, no pharma-price gouging on medicines decades old, and so on.
The US (and Europe) need a crash, not in living standards, but in price structures. That means the people at the top need to become a lot less rich, very very fast. Social welfare isn’t a problem, actually, letting ordinary people have a backup so they can take risks and start new companies is a good thing, and so is forcing companies to really compete for employees. Tech advancement and economic growth was far better in periods with when the US had more generous welfare systems.
Obviously these policies are extremely radical, and equally obviously, America isn’t going to pursue them, so anti-China sanctions are basically pointless and actually accelerate their tech progress.
China now has the lead in more techs than not. That’s not going to change: it’s going to get worse. When the US sent its industrial base to China that became inevitable because all “end of history” bullshit was, in fact, bullshit. Capitalism doesn’t require representative democracy and neither does fast technological progress. (It doesn’t need capitalism, per se, either, but that’s the only solution we know and it was necessary for China to do capitalism to get the industrial base transfer. Also, again, another book sized topic.)
Anyway, again, anti-China or Russia sanctions increase the speed with which they catch up in tech, not decrease it. The Russia sanctions could have been justified if they let Ukraine win, but obviously they didn’t, and it should have been obvious at the time they wouldn’t because of China’s very good reason for not allowing them to work.
Our leaders, still only good at making themselves richer, worthless for all other purposes. And, in the end, the policies they pursued to make themselves rich will just turn them into the people running shithole countries which don’t much matter.
Michael
China IS “the west” and international finance. It has close to 2000 Starbucks. Bytedance, Tik-Tok’s parent company, was founded by someone trained in “western finance” at Goldman Sachs and its controlling shares are held by KKR. For all its batteries and “clean energy” nonsense, China spews more coal-fired crap into the atmosphere than any country on earth, bar none.
China has “lifted people out of poverty” by forcing largely self-supporting farming families into factories and service jobs.
Feral Finster
The US is trying desperately to buy time.
Occasional Poster
@Michael China is not some perfect utopian society that is beyond criticism but its poverty reduction schemes are absolutely not about chasing “self-supporting farm families” into factories or the service sector. There are several good in-depth videos on YouTube about what the “poverty elimination” process involves and how it is carried out. Even PBS did one about 7-8 years ago. It was not allowed to air in the US but it can still be found on YT.
You’re right of course that China is plugged into global capitalism and that all the people trained in finance at western universities may prove to be a problem when it comes to managing Chinese society as it becomes more independent of the west. But saying that China and the western system are one and the same is not accurate.
bruce wilder
“The U.S. is trying . . .”
For some definition of the “U.S.” as an actor. The ruling class is not unitary, and more importantly not any of it is in any kind of solidarity with most of the population.
This makes them “useless” at best and predatory in realistic terms. And, it makes them “stupid” in practice, because they cannot do the right things because that would collapse their own wealth and privilege. Ian says all of this very clearly.
I will add there is unlikely to be a lesser evil path down Seneca’s cliff.
different clue
The advice offered for what ” the West” ( mostly America and then maybe Europe) should do would make part of a good platform for a Lower Class Survival Party to run on.
(Pretending such a thing as “democracy” still exists in America and such a party would be permitted to rise to its natural level).
But it would only work if Americans could surrender the concept of Leading The World and Being Indispensable Nation Number One. The goal of this platform would be survival and not leadership anymore. It would require Americans admitting that the only choice we have left is either Second Rate digital technology behind a beautiful wall of protection, or no digital technology at all in a Forcey-FreeTrade environment. It would require accepting that China is the World Leader Hegemon now and will stay that way for the forseeable future.
Would Americans stand for that? Maybe Lower Class Americans would welcome it if they could have genuine trustworthy guarantees that such an approach would guarantee Lower Class survival. If such an approach could also guarantee torturous vengeance against the Upper Classes and their Upper Middle Class minions, servants and head butlers; then Lower Class Americans might become enthusiastic about the Lower Class Survival program.
Could it be achieved without a movement based on achieving the social class extermination in complete and personal detail against every single Upper and Upper-Middle Class person in this country so as to achieve it over their dead bodies? It would be pretty to think so.
Purple Library Guy
I really get the feeling on this that it’s one of those “Something must be done! This is something. Therefore, this must be done!” things.
Oakchair
“Sanctions work on weak nations.”
America and the West are so used to bullying, destroying, and bombing weak nations that they can’t fathom that tactics that work on weak nations aren’t ineffective against strong nations. I can imagine the Oligarchs of the west thinking, “well sanctions worked against Iraq (1990’s), Venezuela, etc. they’ll definitely work against Russia and China.”
It’s similar the concept that occupying armies get weak. When all you’re used to is stomping on those who cannot really fight back, facing an opponent of equal or stronger abilities is going to be a wake up call.
One effective strategy China is engaging in, is being friendly/helpful to the weaker nations of the Global south. While the west spend their time in power harming the Global south, China is busy building the South’s infrastructure. When push comes to shove the Global South is going to choose China’s side over the west.
Feral Finster
@different clue: to do all that would require the United States to abandon its empire voluntarily.
The ruling class never would allow that to happen.
Curt Kastens
OK the policy is stupid. But you did exagurrate a tad bit. I do not need to imagine a policy more stupid. I have seen policies more stupid.
One recent policy that was more stupid was for Germany to side with the US over Russia.
That stupid decsion led to the German system pretending in front of the entire nation that they did not know who really blew up the Northstream gas pipeline. And for Germany to then continue to support the United States revealed that Germany is in no way shape or form an actually independent country.
Well I guess an implication of knowing that Germany is not actually independent is that one could perhaps “German Leaders” did not do anything stupid because there is no such thing as a “German Leader”.
Well except maybe for me. But since no one follows me, even on twitter, it coulld certianly be argued that I am not a leader, and that the only thing that I ever led was a dog named Sue.
Then to top that off there was the more systematic luancy of trying to replace internal combustion engine (ICE) cars with electric cars (EVs). Anyone who thinks that replacing ICE cars with EVs passed any kind of a risk costs benifits threshhold has less sense that an Angle Dust addict.
different clue
@Feral Finster,
You are correct. The Ruling Class would never allow it. Or rather, they would only allow it over their dead bodies. Which is why a class exterminationist movement might arise to deal with the ” never allow it” problem.
The Ruling Class figured out how to immunise itself against the rise of another FDR.
The Great Financial Crash gave us another ” New Deal Moment” and the Ruling Class had its Obama, the anti-FDR, firmly installed to prevent the seizing of that moment. And the Ruling Class is determined to prevent the rise of any future FDR . . . ” over our dead bodies” .
Which, again, is where a class exterminationist movement may come into play. And it isn’t ” genocide” if its class based rather than ethnic based. Its “classicide”.
mago
That’s angel dust magic Curt, not angle, but your point is taken.
Also, EV’s are a bad boo boo disastrous cataclysmic idea—a crisis already upon us. The resources used, the economic and environmental cost all wrapped up in green ribbon with glittery tinsel on top.
Kinda like cheering for genocide, or maybe it’s suicide . . .
VietnamVet
One can’t be a boss without someone to order around. With the triumph of the corporate-state, nations became second tier partners who could be bribed/blackmailed to do what the corporate and financial bosses want. Citizens were relegated to debt serfdom.
In 2014 Imperial West went to war with the Kremlin because Vladimir Putin ended western corporate control of its resources. This forced China to ally with Russia to continue access to its cheap energy. EU’s pipelines to Russia’s were blown up. Regional WW3 conflicts keep escalating. Shipping through Suez Canal is being limited by the Houthis. Logistic costs from Asia to Europe are increasing. More shortages and further inflation are inevitable.
The endless wars are completely out of the control of the USA. There are no funds, manpower, or armament to seize Yemen and occupy it. The opening of the Northern Israel front with Hezbollah could destroy Israel with 200,000 conventional missiles and tens of thousands of fighters — triggering the Sampson nuclear option. The scary perspective is that the West seems totally oblivious to reality and is already propagandizing to keep the Ukraine war going through 2025. Unless an armistice is signed and DMZs built right now; one side or the other will collapse by then. The Russian Monarchy collapsed after three years of fighting an unwinnable trench war in 1917.
There is no real option but to end globalization. Restore good governments and secure the borders. Manufacture essentials at home with local resources and healthy willing workers. It is going to happen anyway for better or worse. Take Apple Corporation for example. Huawei despite sanctions has developed China based smartphone that can compete with Apple’s handsets and it will seize the Eurasian Axis market. Apple is trying to move manufacture to India but is facing obstacles with a workforce that is unwilling to live in dormitories and work 12 hours a day, 5/6 days a week.
The USA is facing a second Civil War in 2024. Unless new generation of leadership is selected who support 1) secular republican democracy, 2) withdrawal of its forces back to North America, and 3) restoring the public health and public education systems; chaos will engulf the Americas. Selling of iPhones will cease. Only smuggled burner phones will be sold on street corners along with cartel drugs where cell towers are still working.
different clue
@Vietnam Vet,
The Forcey-FreeTrade Corporate Globalonial Plantation Overstate is too strong to overthrow just now within the countries it rules and occupies. Those people living within its occupied countries who disagree with its existence and resent its harmful effect on their lives can try undermining it from within and below. Different grouploads of people can try different ways to do that. And think about how to do that.
Since I am too squeamish to kill anyone or blow anything up or burn anything down, I am self-limited to legal actions pursuable in open view. I can do the kind of things which make zero difference if I alone or only a hundred or a thousand or a million people also do those things. I can only hope that those things would make an additive mass-accretive difference if 200 million fellow Americans also did the same things within America. If I myself am doing those things, then I at least have personal credibility if the subject of ” what can the individdle DOOOO?” comes up. I can say “here’s what I do and here’s why I think it would make an overall difference if 200 million other Americans did it too.”
People who want to take more kinetic action can watch the old legacy Kurt Saxon video titled ” Bless your heart, Clyde. So you want to make a bomb.” He begins that video by holding up a hand with two fingers missing, and goes on from there. I watched a little of it and then stopped. I haven’t found it anywhere around lately.
He later gave up on the concept of “making a bomb” and began a movement he called ” Survivalism”. https://en.wikipedia.org/wiki/Kurt_Saxon offers a thumbnail wiki about Kurt Saxon. Here is a tiny little blurb about “Saxon’s Survivalism”. I especially like the following little paragraph . . . ” The only inalienable right is to die for ones beliefs. Those who choose beliefs over knowledge, as well as those who don’t know the difference, will not survive the collapse. In most cases, they will have done the only good thing they have ever done, which is to take their defective genes out of our species.” He was an equal opportunity Darwinian Filtrationist.
https://www.survivalplus.com/
I see that the top of the just-above linked-to page has at the top of the screen some tiny little barely visible red words. Those are links to some sample articles taken from the information material his legacy company still sells. Here, for example , is a set of articles linked-to under the barely visible tiny red words ” survival foods”.
https://www.survivalplus.com/category/survival-foods/
Survivalists ( or Survivalismists, if we are being ideological about it) have given up on “changing society” and have long since decided to go gray in place and hope to outlive the collapse of the house of iron cards.
Altandmain
Perhaps because the US economy has been so financialized, and the US ruling class so out of touch with how manufacturing / innovation actually works, they naively thought that their sanctions war on China would actually work.
China is producing many times as engineers as the US. It’s important to keep in mind that the US is also heavily reliant on foreign students. The number of “native” US engineers is actually quite small.
https://www.science.org/content/article/drop-foreign-applicants-worries-us-engineering-schools
Presumably many of these come from China. One could imagine a world where the US loses a large percentage of these and the Chinese university students remain in China, contributing to the Chinese economy.
In the long run, the US is going to find another problem , as the US begins to decline, its universities will also lose in prestige and American higher education will not be able to attract the top talent throughout the world.
What will happen is that the US ruling class will accelerate the US decline in both economics and technology leadership. The ruling class, as noted by some of the comments, is never going to voluntarily surrender power. It’s going to be forced by economic realities and declining US power.
At that point, a humbled US ruling class is going to have to negotiate from a position of weakness. It may even be a new ruling class, if the US collapse brings about regime change in the US. How ironic then that would happen, as they sought regime change in Chin and Russia.