“If you shut out [China] with export control, [they’ll] strive toward tech sovereignty… [Then] they’ll be able to do it all by themselves and the market [for European suppliers] will be gone.”
The great problem in the neoliberal era is that the usual road for tech and industrial catch-up, protectionist tariffs is mostly closed. (This is how Britain, the US, and almost everyone created their industrial base and caught up in tech.)
Despite what a lot of people seem to think, China isn’t a command economy. It’s a capitalist one, albeit with a large state company sector. Letting markets in is explicitly how Deng created the Chinese economic miracle.
So China buys a lot from other countries. It is a trading state, and that makes it more difficult to catch up in some techs.
Now, if this was done to, say, Bangladesh, or probably even India, those countries would be screwed — they don’t have the industrial and knowledge base. But China has these things; sure, it wasn’t cost-effective to do all the research necessary to learn how to make this equipment when they could just buy it, and after all, they need to buy some things from their customers.
But if they can’t buy it, they can learn how to make it themselves. Sure, it’ll cost them two or three years. It’ll hurt. But they’ll get over it, and then they can make it for themselves.
The knock-on effect is fun, though: Once China can make this equipment, they can sell it to other countries, which means those countries (Brazil, Iran, India, etc.) don’t need to get it from the West, and sanctions become much less effective because there’s another option on the table.
So by sanctioning China, the West will soon lose its ability to sanction not just China but pretty much the rest of the world.
Fun!
This is also true of the sanctions on aircraft equipment, by the way. China, which has a rather advanced space industry, will learn how to make its own civilian aircraft, and then, instead of everyone having to get aircraft from Europe (Airbus) or the US (Boeing, though Boeing is losing the ability make aircraft), they’ll be able to get it from China (and possibly Russia as well).
Now sanctions like these have their place: You do them just before you’re about to declare war. But if we aren’t going to do that (and there are certainly factions in Washington who do want a war with China soon), then it’s just foolishness.
Let’s hope it’s just foolishness.
bruce wilder
China certainly does have the capability: we call it Taiwan.
This is close to provoking war, daring China to seize Taiwan.
KT
I agree with your conclusions here but I think you’re really underestimating the time required to develop some of the more advanced technologies needed to be totally independent. Creating the machine tools needed to manufacture the most advance chips on their own is not going to happen in 2-3 years. Really interesting book on this subject by Chris Miller called Chip War.
Ian Welsh
I spent some time talking to an expert on how long it would take China to get to 7nm. Years I was told.
Then a few months later, there they were. I’m betting it’ll be faster this time than western experts believe, as well.
Willy
I’d think that under our current late-stage capitalism conditions, anything can be bought right quick and without much in the way of ramification for the dealmakers. I myself was once part of an official ‘technology transfer to-overseas’ for the sole purpose of making quarterly profits which mostly benefitted the dealmakers in power, who ignored the possibility that those overseas companies could use our own technologies against us.
bruce wilder
China doesn’t have to take military control of Taiwan, they just have to draw critical technical help from Chinese there who feel loyalty, kinship, or think appeasement wise.
The U.S. is not the tech monopolist in this arena that the neoliberals in D.C. think it is.The U.S. is third world country.
different clue
I remember a story a member of my general-overall family ( no more specificity needed) told me once about “export control” as he experienced it. He was in the National Guard at the time and he was one of a couple or so people assigned to help a group of Customs Officials at the New York-Quebec border look at stuff being sent over the border.
This happened over 20 years ago so I can’t remember exact quotes. But to paraphrase, he told me that he saw some sensitive helicopter-related technology about to go over the border for South Korea. He recognized it as sensitive forbidden-to-sell-or-ship technology and said so. Phone calls flew back and forth as he continued refusing to sign off on the shipment ( his signature being necessary). Finally, someone from the State Department in Washington DC called and told him something to the effect that ” we have determined, thanks to our long-distance X-ray vision, that those parts are not what you mistakenly believe them to be, and you WILL sign off on their goodness-to-go.”
So he signed off. They were “good to go” so don’t touch. Just like Epstein was Intelligence, so don’t touch.
Mark Level
Spot on as usual, Ian. I think the way the Russians recently deployed either Iranian-made drones, or knock-offs of what the Iranians produced once the US & Israel had isolated them, as small destroyers of the already fractured Ukranian-Azov power grid, is a prescient example of what you are talking about. Also, I love your closer, “Let’s hope it’s all just foolishness”– man, the snark on that is thick enough to cut with a knife!! I think we all know that at this point the US political class is so high on their own supply (creating our own reality, as the brilliant Magus Karl Rove put it) that they are like Wile E Coyote with their endless plans for the destruction of others!! I’d say major parts of the country are very close to collapse from the level of unreality and propaganda. My gut (which could be wrong) tells me that poor Pres. Bidet’s completely MIA stewardship of the US during the first 2 years of his (stolen from Bernie) term will hand things over to the R’s. Then “the clampdown” that Mr. Strummer warned of back c. 1980 is gonna hit very hard. Government will get very “activist” hounding women, teh geys, and dissidents. (What the R’s won’t do, no matter what occasional sane words emerge in Marjorie Taylor Greene’s schizotypic word salad productions, is shut off the money spigot to the poor Ukranian proxies). I have a former co-worker who regularly hurt himself “accidentally” at work or at his family’s house (walking into his sister’s house when she wasn’t home but her pit-bull was, getting bitten in the groin) & recently mutual friends shared with me that he had severed a considerable portion of his hand (anywhere from 1 to 3 digits from preliminary reports, & “severed a major artery,” nearly bled out before he reached the ER) in a “gardening accident.” I think the “foolishness” you reference is akin to this kind of (self) destructiveness, but props to our “leaders.” Their violence, sanctions, etc., unending and unable to be questioned (lest the dogs bark you are a “Russian agent”! etc.) maim, kill and deprive many people, but rarely are they themselves hurt. I guess that’s why we call it a “system”?
Eric Anderson
This is the paradox that is capitalism.
“Greed is good” is synonymous with “sell your soul.”
The capitalists literally sold the sole of this nation and called it good.
Pretty sure when you sell your soul, hell is your reward.
But, what do I know. I’m just a scientific rationalist.
Willy
Eric, regarding souless capitalists… a bit of good news, such as it is.
My physician in-law retired early after he got his 7-figure nepotistic-partner-payout for his part in allowing their MBAs to turn his once-physician-run clinic into a money extraction scheme. He appears to be having pangs of guilt.
Meanwhile his lifelong MBA buddy who got him that job, found another clinic in a different city to MBA-ify as their new CEO. As with the old clinic, online reviews have tanked from 4-ish stars into the 1+ stars. The good news (and difference) is that reviewers are not only clearly itemizing the new differences (including billing fraud and seeing publicly posted business charts in the backroom rating the doctors profit value, implying referrals for unnecessary procedures) but reviewers are starting to call out the CEO by name and refer readers to less corrupted clinics.
To my mind this helps to clarify what exactly “late stage capitalism” is all about and to get more “independents” and apathetics thinking.
Eric Anderson
Willy, perhaps recommend a few Econ classes to assuage your physician-in-law’s guilt. Study after study demonstrate kids walk into econ majors normal human beings, and walk out sociopaths.
Check this, for example. It’s a good summary. Link to the study at the top of the page: https://www.econjobrumors.com/topic/breaking-economists-are-sociopaths-study
Carborundum
This is worth a read to put the 7nm process headline furor in context:
https://www.theregister.com/2022/08/01/column_7nm_chips_china/
Trinity
“We really are run by fools.”
I wish this was true, which would mean they would eventually see the error of their ways, and fix it. And become lesser fools in this process of gaining wisdom.
Alas, they are not fools, they are literally insane addicts, drunk on power and money. More money means more power; more power means more money.
Like any addict, they require more and more of their drugs-of-choice (power and money) to maintain their “high”, and just like any other addict, they are laser focused on obtaining their next fix, in whatever way possible, by whatever means necessary.
Muskrat has exemplified this behavior so well, so recently. He followed the playbook to the letter with that purchase, but didn’t seem to account for the “irrelevants”, the people who actually use the service he purchased. That’s the sociopathic side, where consideration of anyone else is irrelevant. Only the needed “fix” matters.
What are they going to do when the supply starts to become scarce and the lows run longer than the highs? When there are only three mega mega monopolies left? Oh yeah … Russia, China, India, Africa, et al. And then Mars. But first, the Moon!