Comment by Riaz Haq on March 18, 2021 at 9:12am

#Biden's #China Policy: #US “should put less focus on trying to slow China down and more emphasis on trying to run faster ourselves”. #America's common anti-China policy with #Japan, #SouthKorea, #India and #Australia #geopolitics #Quad #Asia #IndoPacific https://www.nytimes.com/2021/03/17/us/politics/us-china-relations.html

President Biden is engineering a sharp shift in policy toward China, focused on gathering allies to counter Beijing’s coercive diplomacy around the world and ensuring that China does not gain a permanent advantage in critical technologies.

At first glance, it seems to adopt much of the Trump administration’s conviction that the world’s two biggest powers are veering dangerously toward confrontation, a clear change in tone from the Obama years.

But the emerging strategy more directly repudiates the prevailing view of the last quarter century that deep economic interdependence could be counted on to temper fundamental conflicts on issues like China’s military buildup, its territorial ambitions and human rights.

It focuses anew on competing more aggressively with Beijing on technologies vital to long-term economic and military power, after concluding that President Donald J. Trump’s approach — a mix of expensive tariffs, efforts to ban Huawei and TikTok, and accusations about sending the “China virus” to American shores — had failed to change President Xi Jinping’s course.

The result, as Jake Sullivan, President Biden’s national security adviser, put it during the campaign last year, is an approach that “should put less focus on trying to slow China down and more emphasis on trying to run faster ourselves” through increased government investment in research and technologies like semiconductors, artificial intelligence and energy.

Mr. Sullivan and Secretary of State Antony J. Blinken will road-test the new approach in what promises to be a tense first encounter on Thursday with their Chinese counterparts in Anchorage. It is a meeting they delayed until they could reach the outlines of a common strategy with allies — notably Japan, South Korea, India and Australia — and one they insisted had to take place on American soil.

But it will also be a first demonstration of Beijing’s determination to stand up to the new administration, and a chance for its diplomats to deliver a litany of complaints about Washington’s “evil” interference in China’s affairs, as a Chinese Foreign Ministry spokesman put it on Wednesday.

The United States imposed sanctions on 24 Chinese officials on Wednesday for undermining Hong Kong’s democratic freedoms, an action whose timing was pointed and clearly intentional. Mr. Blinken said in Tokyo this week that “we will push back if necessary when China uses coercion or aggression to get its way.”

And that is happening almost daily, he conceded, including Beijing’s efforts to terminate Hong Kong’s autonomy, intimidate Australia and Taiwan, and move ahead, despite international condemnation, with what Mr. Blinken has said is a “genocide” aimed at China’s Uyghur minority.

It is all part of the initial resetting of the relationship that has marked Mr. Biden’s renewed, if now far more tense, encounters with Mr. Xi.

Back when Mr. Biden was vice president and Mr. Xi was consolidating power on his way to becoming China’s most powerful leader in decades, the two men met in China and the United States and offered public assurances that confrontation was not inevitable.

The intelligence assessment inside the American government at the time was that Mr. Xi would proceed cautiously, focus on economic development at home and avoid direct confrontation with the United States.

Comment by Riaz Haq on March 19, 2021 at 7:30pm

Mr. Biden, Enough With the Tough Talk on China
Modest measures can reverse the dangerous decay in relations.

Ian Johnson
By Ian Johnson
Mr. Johnson was a China correspondent for two decades.

March 19, 2021

These harsh exchanges will only contribute to the dangerous decay in relations between the world’s two most powerful countries. Both sides seem to be trapped by a need to look and sound tough. That stance may play well domestically in both countries, but it complicates doing what is really needed: engaging, with realistic expectations, with the other side.


https://www.nytimes.com/2021/03/19/opinion/us-china-biden.html

Since taking office nearly two months ago, the Biden administration has been a whirlwind of activity in reforming and revisiting almost every key problem area but one: the chaotic and incoherent China policy it inherited from the Trump administration.

Top U.S. and Chinese officials met Thursday in Alaska for the first time since the new administration took power. The meeting, framed as little more than a chance for each side to state their well-known positions, fell short of even those low expectations.

In a series of blunt remarks, U.S. Secretary of State Antony J. Blinken said that the U.S. government had “deep concerns with actions by China, including in Xinjiang, Hong Kong, Taiwan, cyberattacks on the United States and economic coercion toward our allies” — actions, he said, that “threaten the rules-based order that maintains global stability.” In a lengthy presentation that went well over the agreed-upon time limit, China’s top diplomat, Yang Jiechi, countered that the United States was the “champion” of cyberattacks and that “many people within the United States actually have little confidence in the democracy of the United States.”

These harsh exchanges will only contribute to the dangerous decay in relations between the world’s two most powerful countries. Both sides seem to be trapped by a need to look and sound tough. That stance may play well domestically in both countries, but it complicates doing what is really needed: engaging, with realistic expectations, with the other side.

Now that each government has had its say, the United States should take the high ground and find ways to reduce tensions, even if those can partly be blamed on China’s recent actions.

One way forward would be to reverse some of the Trump administration’s burn-the-bridges measures, like its ending academic exchanges, expelling Chinese journalists and closing consulates.

The Biden administration has sought to characterize its China policy as more nuanced than that of the Trump White House. Shortly after taking office, the president said that the United States sought “extreme competition” with China but not conflict. Mr. Blinken said in Tokyo this week, during his first official trip abroad, “The relationship with China is a very complex one: It has adversarial aspects; it has competitive aspects; it has cooperative aspects.”

But the administration’s actions so far have largely followed the Trump playbook.

Comment by Riaz Haq on March 19, 2021 at 7:31pm

U.S., China exchange strong words, but both label talks constructive

https://www.pbs.org/newshour/show/u-s-china-exchange-strong-words-b...


Susan Thornton:

Yes, I think this meeting was about restarting diplomacy with China after a four-year hiatus, basically, under the previous administration.

And you do diplomacy to engage counterparts in private to try to find a way forward on areas where you have overlapping interests. And Secretary Blinken mentioned there at the end a number of areas, North Korea, Afghanistan, Iran, climate change, where there are overlapping interests.

And to sit together with the other side and find out where those areas are and a way forward, that's the art of the goal. So I think that the circus in front of the cameras to start off was a bit unfortunate. I am not sure that that is necessarily a productive way to start this off, but it looks like they were able to savor something for the end.

---------

Susan Thornton:

I think that there is a lot of continuity that we see with Xi Jinping. And I am not that surprised by anything we see in China.

There's — it is not coming out of the blue. Certainly, there has been regression on human rights and in a lot of practices domestically, in China's domestic politics, certainly now also vis-a-vis the United States. They are starting to pursue a policy of indigenization of their technological industries.

But I think, in general, the error that the U.S. makes is in thinking that we are going to have some kind of fundamental way of changing China. I personally don't think China represents an existential threat. I think we need learn to live with China and coexist. They are not going anywhere, but we are probably not going to be able to change them fundamentally.

Comment by Riaz Haq on March 23, 2021 at 12:48pm

Fareed Zakaria on GPS March 21, 2021:

"Consider two contrasting exercises of power. America's F-35 fighter jet program, devilled by cost overruns and technical problems, will ultimately cost taxpayers $1.7 trillion according to a document obtained by Bloomberg. China will likely spend a comparable amount of money on the belt and road initiative, an ambitious set of loans, aid and financing for infrastructure projects across the world aimed at creating greater interdependent with dozens of countries that are important to Beijing."

http://transcripts.cnn.com/TRANSCRIPTS/2103/21/fzgps.01.html

Comment by Riaz Haq on April 16, 2021 at 5:41pm

Global Trends 2024 "A More Contested World": Why #US #Spy Agencies Say the Future Is Bleak as Competition with #China Ratchets up in the Next 20 years. #Climatechange, #technology, #pandemics and #financial crises will pose big challenges for the world. https://www.nytimes.com/2021/04/15/opinion/global-trends-intelligen...

The world envisioned in the 144-page report, ominously subtitled “A More Contested World,” is rent by a changing climate, aging populations, disease, financial crises and technologies that divide more than they unite, all straining societies and generating “shocks that could be catastrophic.” The gap between the challenges and the institutions meant to deal with them continues to grow, so that “politics within states are likely to grow more volatile and contentious, and no region, ideology, or governance system seems immune or to have the answers.” At the international level, it will be a world increasingly “shaped by China’s challenge to the United States and Western-led international system,” with a greater risk of conflict.

Here’s how agencies charged with watching the world see things:

“Large segments of the global population are becoming wary of institutions and governments that they see as unwilling or unable to address their needs. People are gravitating to familiar and like-minded groups for community and security, including ethnic, religious, and cultural identities as well as groupings around interests and causes, such as environmentalism.”

“At the same time that populations are increasingly empowered and demanding more, governments are coming under greater pressure from new challenges and more limited resources. This widening gap portends more political volatility, erosion of democracy, and expanding roles for alternative providers of governance.”

“Accelerating shifts in military power, demographics, economic growth, environmental conditions, and technology, as well as hardening divisions over governance models, are likely to further ratchet up competition between China and a Western coalition led by the United States.”

“At the state level, the relationships between societies and their governments in every region are likely to face persistent strains and tensions because of a growing mismatch between what publics need and expect and what governments can and will deliver.”

Experts in Washington who have read these reports said they do not recall a gloomier one. In past years, the future situations offered have tilted toward good ones; this year, the headings for how 2040 may look tell a different story: “Competitive Coexistence,” “Separate Silos,” “Tragedy and Mobilization” or “A World Adrift,” in which “the international system is directionless, chaotic, and volatile as international rules and institutions are largely ignored by major powers like China, regional players and non-state actors.”

There is one cheery scenario thrown in, “Renaissance of Democracies,” in which the United States and its allies are leading a world of resurgent democracies, and everybody is getting happier. Its apparent purpose is to show that people could, in principle, turn things around. But nothing in the report suggests it is likely.

The gloom, however, should not come as a surprise. Most of what Global Trends provides are reminders of the dangers we know and the warnings we’ve heard. We know that the world was ill prepared for the coronavirus and that the pandemic was grievously mishandled in most parts of the world, including the United States. We know the Arctic caps are melting at a perilous rate, raising sea levels and threatening dire consequences the world over. We know that for all the grand benefits of the internet, digital technology has also unleashed lies, conspiracies and distrust, fragmenting societies and poisoning political discourse. We know from the past four years what polarized and self-serving rule is like. We know that China is on the rise, and that it is essential to find a manageable balance between containment and cooperation.

Comment by Riaz Haq on May 2, 2021 at 7:51pm

Chip shortage highlights U.S. dependence on fragile supply chain - 60 Minutes - CBS News

https://www.cbsnews.com/news/semiconductor-chip-shortage-60-minutes...

Lesley Stahl: Should Americans be concerned that most chips are being manufactured in Asia today?

Mark Liu: I understand their concern, first of all. But this is not about Asia or not Asia I mean, the shortage will happen no matter where the production is located because it's due to the COVID.

Lesley Stahl: But Pat Gelsinger at Intel talks about a need to rebalance the supply chain issue because so much, so many of the chips in the world now are made in Asia.

Mark Liu: I think U.S. ought to pursue to run faster, to invest in R&D, to produce more Ph.D., master, bachelor students to get into this manufacturing field instead of trying to move the supply chain, which is very costly and really non productive. That will slow down the innovation because-- people trying to hold on their technology to their own and forsake the global collaboration.

Within the world of global collaboration there's intense competition. Days after Intel announced spending $20 billion on two new fabs, TSMC announced it would spend $100 billion over three years on R&D, upgrades, and a new fab in Phoenix, Arizona, Intel's backyard, where the Taiwanese company will produce the chips Apple needs but the Americans can't make.

Mark Liu: That was a big investment.

But there's a looming shadow over TSMC, which supplies chips for our cars, iPhones, and the supercomputer managing our nuclear stockpile: China's President Xi Jinping, who has intensified his long-time threat to seize Taiwan.

China's attempts to develop its own advanced chip industry have failed and so it's been forced to import chips. But last year, Washington imposed restrictions on chipmakers from exporting certain semiconductors to china. Both Liu and Gelsinger fear the escalating trade war with China may backfire, and in Intel's case: could hurt business.

Lesley Stahl: Are they your biggest customer?

Pat Gelsinger: China is one of our largest markets today. You know, over 25% of our revenue is to Chinese customers. We expect that this will remain an area of tension, and one that needs to be navigated carefully. Because if there's any points that people can't keep running their countries or running their businesses because of supply of one critical component like semiconductors, boy, that leads them to take very extreme postures on things because they have to.

The most extreme would be China invading Taiwan and in the process gaining control of TSMC. That could force the U.S. to defend Taiwan as we did Kuwait from the Iraqis 30 years ago. Then it was oil. Now it's chips.

Lesley Stahl: The chip industry in Taiwan has been called the Silicon Shield.

Mark Liu: Yes.

Lesley Stahl: What does that mean?

Mark Liu: That means the world all needs Taiwan's high-tech industry support. So they will not let the war happen in this region because it goes against interest of every country in the world.

Lesley Stahl: Do you think that in any way your industry is keeping Taiwan safe?

Mark Liu: I cannot comment on the safety. I mean, this is a changing world. Nobody want these things to happen. And I hope-- I hope not too-- either.

Comment by Riaz Haq on May 3, 2021 at 1:39pm

Shortage of #semiconductors, dubbed the 'new oil,' could dent #GDP growth, boost #inflation. "While semiconductors account for only 0.3% of US output, they are an important production input to 12% of GDP” #technology #SiliconValley #Intel #TSMC #Samsung https://cnb.cx/2RVCitw


KEY POINTS
A variety of factors have converged to make coveted semiconductors scarce.
Goldman Sachs says the GDP hit from the shortage could be 0.5% this year while price increases could hit 3% for affected goods.
TS Lombard economist Rory Green calls semis the “new oil” for the global impact that disruptions can cause.

Economic growth could slow and inflation is likely to see at least a momentary bump higher as the semiconductor shortage worsens, economists say.

A variety of factors have converged to make the coveted computer chips scarce. Soaring demand coupled with supply bottlenecks have led to a situation in which orders for everything from cars to televisions to touch-screen computers and more are on backup for six months or more.

With semis at the core of so much U.S. economic activity, the ongoing supply problems are likely to have ripples.

Goldman Sachs economists say that for the bulk of 2021, the shortage will translate into an inflationary tax that could result in prices rising as much as 3% for affected goods. That would boost inflation as much as 0.4 percentage points through the rest of the year, the firm said.

“Taken together, while we see relatively modest implications of the semiconductor shortage for GDP growth and the industrial sector, it represents another reason to expect core goods inflation to remain firm this year,” Goldman economist Spencer Hill said in a note.

Even though the hit won’t cause a dramatic slowdown to an economy expected to roar in 2021, the impact could still be noticeable. Goldman said the impact could reach as high as a 1% subtraction from activity, but likely will be closer to 0.5%.

Disruptions to the ‘new oil’
“While semiconductors account for only 0.3% of US output, they are an important production input to 12% of GDP,” Hill said, nothing that the shortage could cut auto production by 2% to 6% this year.

Indeed, multiple automakers have curtailed production due to lack of chips vital to their vehicles.

Stellantis NV said it will be temporarily laying off workers at its Detroit Jeep plant, while Volvo also has said the chip issues will cause it to shut some plants until the situation is resolved.

The knock-on impacts of any disruptions in the semiconductor industry are becoming increasingly apparent.

“As the world becomes more interconnected, more automated and greener, each unit of GDP growth will contain a higher content of semiconductors. Integrated circuits are becoming the key commodity input for economic activity,” wrote TS Lombard economist Rory Green.

Green calls semis the “new oil” for the global impact that disruptions can cause.

“The current severe shortage of semiconductors, which is halting automotive production worldwide, underscores the speed and scale of the changes under way,” he said. “Chips have always been an important part for manufacturing and consumer electronics, but their use will broaden to transport and digital services.”

Still, Goldman’s Hill said the inflationary impact likely won’t last far as supply increases later this year and into 2022. But the shortage now “represents another reason to expect core goods inflation to remain firm this year,” he said.

Comment by Riaz Haq on June 8, 2021 at 9:53pm

The new geopolitics of global business | The Economist


https://www.economist.com/leaders/2021/06/05/the-new-geopolitics-of...


Amazon’s near-death experience was part of the dotcom crash that exposed Silicon Valley’s hubris and, along with the $14bn fraud at Enron, shattered confidence in American business. China, meanwhile, was struggling to privatise its creaking state-owned firms, and there was little sign that it could create a culture of entrepreneurship. Instead the bright hope was in Europe, where a new single currency promised to catalyse a giant business-friendly integrated market.

Creative destruction often makes predictions look silly, but even by these standards the post-pandemic business world is dramatically different from what you might have expected two decades ago. Tech firms comprise a quarter of the global stockmarket and the geographic mix has become strikingly lopsided. America and, increasingly, China are ascendant, accounting for 76 of the world’s 100 most valuable firms. Europe’s tally has fallen from 41 in 2000 to 15 today.

Top 100 Tech Firms by valuation:

US 58, Europe 11, China 8, Japan 6, Taiwan 6, South Korea 3, Canada 3, Israel 2, Australia 1, Bermuda 1, UK 1


Top 10 Tech Firms by valuation

US 6, China 2, Taiwan 1, South Korea 1

https://companiesmarketcap.com/tech/largest-tech-companies-by-marke...

Comment by Riaz Haq on June 9, 2021 at 9:05am

#US Senate overwhelmingly passes $250 billion #tech #investment bill aimed at countering #China. The money will be invested in #American #manufacturing and #technology to meet #economic & #strategic challenge from China. #semiconductors #AI #geopolitics https://ti.me/3g5kDZP

Also added to the new bill was a separate initiative that provides $52 billion in incentives and grant programs to bolster domestic semiconductor manufacturing, sought by Republican Senators John Cornyn of Texas and Tom Cotton of Arkansas and Democrats Mark Kelly of Arizona and Mark Warner of Virginia.

The move was cheered by those in the industry, following months of complaints from manufacturers that a semiconductor shortage was hampering the delivery of everything from consumer electronic devices to pickup trucks.

“Semiconductors form the nerve center of America’s economy, national security, and critical infrastructure,” said John Neuffer, the president and CEO of the Semiconductor Industry Association. “We look forward to working with leaders in the administration and Congress to swiftly enact needed federal investments in chip technology to help ensure more of the chips our country needs are researched, designed and manufactured on U.S. shores.”

Darpa Money
That money, along with another $2 billion for related programs, would be available upon the law’s passage. The other spending in the bill would be subject to the appropriations process. An amendment from Senator Ben Sasse, a Republican from Nebraska, would also authorize an additional $17.5 billion for the Defense Advanced Research Projects Agency — or Darpa — over a period of five years.

Some Republicans rejected the idea of the government directing research and industrial policy.

“Maintaining our technological superiority over China requires punishing bad Chinese behavior and relying on the natural innovative entrepreneurship of America’s market economy, not by imitating Chinese central planning,” Pennsylvania GOP Senator Pat Toomey said in a statement before voting against the bill.

Senate GOP leader Mitch McConnell, who had criticized earlier versions of the bill as “not ready for prime time” and weak on defense, said the legislation was an important step forward and a rare area of bipartisan compromise, but should not be the “final word” on U.S. competition with China.

“Needless to say, final passage of this legislation cannot be the Senate’s final word on our competition with China,” McConnell said on the Senate floor. “It certainly won’t be mine.”

Comment by Riaz Haq on June 20, 2021 at 7:00am

#China appoints Harvard-educated chip czar to accelerate domestic #semiconductor #manufacturing #technology. Vice Premier Liu will be in charge of industrial policy to catch up with #US, #Taiwan and #SouthKorea in advanced #semiconductors. https://asiatimes.com/2021/06/is-the-us-chip-wall-starting-to-crumble/

The Harvard-educated career bureaucrat is not an engineer, but more of an expert in economics and industrial policy.

That means the 69-year old Liu will have to rely on experts when it comes to decisions in his remit: semiconductor materials, equipment and processes.

But rather than merely catch-up, Liu’s chip strategy will likely be to explore areas rivals have yet to master in the hope that China can colonize these technologies.

It’s the kind of moonshot approach that the People’s Republic already practices. China last week released the first images taken on Mars as part of its Tianwen-1 interplanetary mission.

That success, according to Beijing-based consultancy Trivium, “validates the focus on pursuing leapfrog development,” focusing on next-generation technologies where no country has a clear advantage.

-------------

“Failure is not an option” is an epic phrase associated with Gene Kranz and the Apollo 13 Moon landing mission, which went terribly wrong, but ended happily thanks to some Mission Control heroics.

Likewise, with a newly-appointed vice premier at the microchip helm, China is leaving itself no more excuses to fail.

The nation’s decision to anoint a “chip czar” is the latest step to advance its semiconductor industry in the face of harsh US sanctions.

While China still has a ways to go in catching up to the US, Taiwan and South Korea, Vice Premier Liu He is a worthy choice to spearhead the development of future semiconductor technologies, Business Standard reported.

He’s headed China’s technology reform since at least 2018, acted as chief negotiator in US-China trade talks and his position within leader Xi Jinping’s inner circle ensures his recommendations get heard.

----------


Beijing is right to trumpet this success in space, and the results ought to boost morale within its struggling chip sector.

According to the South China Morning Post, China’s output of integrated circuits (IC) in May reached an all-time, single month high, as the country pulled out all stops to produce chips, according to central government data.

China’s chip output in May surged 37.6% from a year ago, to 29.9 billion units, the National Bureau of Statistics date showed.

While China’s chip makers are not able to produce high volumes of advanced 14-nm node chips — the type needed to power the latest iPhones — the country’s chip designers and manufacturers can produce mature technology ICs for home appliances and automobiles, SCMP reported.

In the first five months of this year, China produced 139.9 billion IC units, a 48.3% surge compared to the same period last year, data showed.

The latest data confirms that China is sparing no effort in its pursuit of self-sufficiency in semiconductors, SCMP reported.

In March, Beijing moved to waive levies on imported semiconductor parts and materials until 2030, SCMP reported. The Chinese government has declared its ambition to cultivate a US$237 billion domestic component market by 2023.

Meanwhile, Huawei Technologies is adamant in its pursuit of developing world-beating semiconductors, despite toughened US sanctions, according to Catherine Chen, a Huawei director and senior vice-president, Nikkei Asia reported.

Chen said the company has no intention of restructuring chip design subsidiary HiSilicon, despite the fact it has more than 7,000 workers on its payroll and is expected to go years without contributing to earnings.

But Huawei is privately held and unaffected by external forces, and its management has clearly shown it intends to retain HiSilicon, Chen said.

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