Comment by Riaz Haq on March 9, 2023 at 8:13am

China is right about US containment | Financial Times

By Edward Luce

https://www.ft.com/content/bc6685c1-6f17-4e9e-aaaa-922083c06e70

But encircling Beijing is not a viable long-term strategy

Here is a thought experiment. If Taiwan did not exist, would the US and China still be at loggerheads? My hunch is yes. Antagonism between top dogs and rising powers is part of the human story. The follow-up is whether such tensions would persist if China were a democracy rather than a one-party state. That is harder to say but it is not obvious that an elected Chinese government would feel any less resentful of the US-led global order. It is also hard to imagine the circumstances in which America would willingly share the limelight.

All of which suggests that loose talk of a US-China conflict is no longer far-fetched. Countries do not easily change their spots: China is the middle kingdom wanting redress for the age of western humiliation; America is the dangerous nation seeking monsters to destroy. Both are playing to type. The question is whether global stability can survive either of them insisting that they must succeed. The likeliest alternative to today’s US-China stand-off is not a kumbaya meeting-of-minds, but war. This week, Xi Jinping went further than before in naming America as the force behind the “containment”, “encirclement” and “suppression” of China. Though his rhetoric was provocative, it was not technically wrong. President Joe Biden is still officially committed to trying to co-operate with China. But Biden was as easily blown off course last month as a weather balloon. Washington’s panic over what is after all 19th-century technology prompted Antony Blinken, the US secretary of state, to cancel a Beijing trip that was to pave the way for a Biden-Xi summit. Washington groupthink drove Biden’s overreaction. The consensus is now so hawkish that it is liable to see any outreach to China as weakness. As the historian Max Boot points out, bipartisanship is not always a good thing.


Some of America’s worst blunders — the 1964 Gulf of Tonkin resolution that led to the Vietnam war, or the 2002 Iraq war resolution — were bipartisan. So is the new House committee on China, which its chair, Mike Gallagher, says will “contrast the Chinese Communist party’s techno-totalitarian state with the Free World”. It is probably safe to say he will not be on the hunt for contradictory evidence.

A big difference between today’s cold war and the original one is that China is not exporting revolution. From Cuba to Angola and Korea to Ethiopia, the Soviet Union underwrote leftwing insurgencies worldwide.


The original idea of containment, laid out in George Kennan’s 1947 Foreign Affairs essay, The Sources of Soviet Conduct, was more modest than the undeclared containment that is now US policy. Kennan’s advice was twofold: to stop the expansion of the Soviet empire; and to shore up western democracy. He counselled against the use of force. With patience and skill the USSR would fold, which is what eventually happened.

Today’s approach is containment-plus. When Xi talks of “suppression”, he means America’s ban on advanced semiconductor exports to China. Since high-end chips are used for both civil and military purposes, the US has grounds for denying China the means to upgrade its military. But the collateral effect is to limit China’s economic development.

There is no easy way round this. One possible side-effect will be to accelerate Xi’s drive for “made in China” technology. The Chinese president has also explicitly declared Beijing’s goal of dominating artificial intelligence by 2030, which is another way of saying that China wants to set the rules.

Comment by Riaz Haq on March 9, 2023 at 8:14am

China is right about US containment | Financial Times

By Edward Luce

https://www.ft.com/content/bc6685c1-6f17-4e9e-aaaa-922083c06e70

But encircling Beijing is not a viable long-term strategy


The one positive feature of today’s cold war compared with the last one — China and America’s economic interdependence — is thus something Biden wants to undo. Decoupling is taking on an air of inevitability. When Xi refers to “encirclement”, he is thinking about America’s deepening ties to China’s neighbours. Again, Xi mostly has himself to blame.

Japan’s shift to a more normal military stance, which includes a doubling of its defence spending, probably worries China the most. But America’s growing closeness to the Philippines and India, and the Aukus nuclear submarine deal with Australia and the UK, are also part of the picture. Add in increased US arms transfers to Taiwan and the ingredients for Chinese paranoia are ripe. How does this end?

This is where a study of Kennan would pay dividends. There is no endgame to today’s cold war. Unlike the USSR, which was an empire in disguise, China inhabits historic boundaries and is never likely to dissolve. The US needs a strategy to cope with a China that will always be there.

If you took a snap poll in Washington and asked: one, are the US and China in a cold war; and two, how does the US win it, the answer to the first would be an easy “yes”; the second would elicit a long pause. Betting on China’s submission is not a strategy.


Here is another way to look at it. The US still holds more of the cards. It has plenty of allies, a global system that it designed, better technology and younger demographics. China’s growth is slowing and its society is ageing faster. The case for US resolve and patience is stronger today than it was when Kennan was around. Self-confident powers should not be afraid to talk.

Comment by Riaz Haq on April 17, 2023 at 5:50pm

IMF: "China will be the top contributor to global growth over the next 5 years, with its share set to be double that of the US"


https://www.businesstimes.com.sg/international/china-be-top-world-g...

CHINA will be the top contributor to global growth over the next five years, with its share set to be double that of the US, according to the International Monetary Fund.

The nation’s slice of global gross domestic product expansion is expected to represent 22.6 per cent of total world growth through 2028, according to Bloomberg calculations using data the fund released in its World Economic Outlook released last week. India follows at 12.9 per cent, while the US will contribute 11.3 per cent.

The emergency lender sees the world economy expanding about 3 per cent over the next half decade as higher interest rates bite. The outlook over the next five years is the weakest in more than three decades, with the fund urging nations to avoid economic fragmentation caused by geopolitical tension and take steps to bolster productivity.

In total, 75 per cent of global growth is expected to be concentrated in 20 countries and over half in the top four: China, India, the US and Indonesia. While Group of Seven countries will comprise a smaller share, Germany, Japan, the United Kingdom and France are seen among the top 10 contributors.

Brazil, Russia, India and China – known by the acronym BRIC coined by Jim O’Neill, a former Goldman Sachs Group chief economist – are expected to add almost 40 per cent of the world’s growth through 2028.

The four nations established the BRIC forum in 2009 and the bloc became Brics a year later when South Africa – by far the smallest economy in the grouping – was admitted, a move O’Neill disagreed with.

Comment by Riaz Haq on May 27, 2023 at 4:22pm

Kissinger: Beijing “expects…to be the dominant power in Asia…The ideal solution…is a China so visibly strong that that will occur through the logic of events.”

https://www.wsj.com/articles/the-great-strategist-henry-kissinger-t...

What Mr. Kissinger sees when he looks at the world today is “disorder.” Almost all “major countries,” he says, “are asking themselves about their basic orientation. Most of them have no internal orientation, and are in the process of changing or adapting to the new circumstances”—by which he means a world riven by competition between the U.S. and China. Big countries such as India, and also a lot of “subordinate” ones, “do not have a dominant view of what they want to achieve in the world.” They wonder if they should “modify” the actions of the superpowers (a word Mr. Kissinger says he hates), or strive for “a degree of autonomy.”

Some major nations have wrestled with these choices ever since the “debacle of the Suez intervention” in 1956. While Britain chose close cooperation with the U.S. thereafter, France opted for strategic autonomy, but of a kind “that was closely linked to the U.S. on matters that affected the global equilibrium.”

The French desire to determine its own global policy gave rise to awkwardness with President Emmanuel Macron’s recent visit to Beijing. While critics say he pandered to the Chinese, Mr. Kissinger sees an example of French strategic autonomy at work: “In principle, if you have to conduct Western policy, you would like allies that only ask you about what contribution they can make to your direction. But that is not how nations have been formed, and so I’m sympathetic to the Macron approach.”

It doesn’t bother him that Mr. Macron, on his return from Beijing, called on his fellow Europeans to be more than “just America’s followers.” Mr. Kissinger doesn’t “take it literally.” Besides, “I’m not here as a defender of French policy,” and he appears to attribute Mr. Macron’s words to cultural factors. “The French approach to discussion is to convince their adversary or their opposite number of his stupidity.” The British “try to draw you into their intellectual framework and to persuade you. The French try to convince you of the inadequacy of your thinking.”

And what is the American way? “The American view of itself is righteousness,” says the man famed for his realpolitik. “We believe we are unselfish, that we have no purely national objectives, and also that our national objectives are achieved in foreign policy with such difficulty that when we expose them to modification through discussion, we get resentful of opponents.” And so “we expect that our views will carry the day, not because we think we are intellectually superior, but because we think the views in themselves should be dominant. It’s an expression of strong moral feelings coupled with great power. But it’s usually not put forward as a power position.”

Asked whether this American assertion of inherent unselfishness strikes a chord with other countries, Mr. Kissinger is quick to say: “No, of course not.” Does Xi Jinping buy it? “No, absolutely not. That is the inherent difference between us.” Mr. Xi is stronger globally than any previous Chinese leader, and he has “confronted, in the last two U.S. presidents,” men who “want to exact concessions from China and announce them as concessions.” This is quite the wrong approach, in Mr. Kissinger’s view: “I think the art is to present relations with China as a mutual concern in which agreements are made because both parties think it is best for themselves. That’s the technique of diplomacy that I favor.”

In his reckoning, Joe Biden’s China policy is no better than Donald Trump’s: “It’s been very much the same. The policy is to declare China as an adversary, and then to exact from the adversary concessions that we think will prevent it from carrying out its domineering desires.”

Comment by Riaz Haq on July 5, 2023 at 10:11pm

Are young Taiwanese prepared to fight mainland China?


https://www.wsj.com/articles/taiwan-china-ukraine-russia-hong-kong-...


“A lot of young people who signed up for the four-year volunteer force decided to pay a penalty and dropped out early because they say they had come for the money—not to fight and not to die,” said Alexander Huang, the Kuomintang’s director of international affairs.

Taiwan’s troubled history with its own armed forces is part of the reason. The Kuomintang-led army and government led by Chiang Kai-shek escaped to Taiwan when Mao Zedong’s Communist forces ousted them from the Chinese mainland in 1949. Chiang’s military dictatorship attempted to suppress Taiwan’s sense of identity, seen as tainted by decades of Japanese rule over the island, and engaged in decades of what has since been called a “White Terror,” during which thousands of dissidents were killed.


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TAIPEI, Taiwan—People in Taiwan have been following every twist of the war in Ukraine. But, while their sympathy for the Ukrainian cause is near-universal, the conclusions for the island’s own future widely diverge.

To some, the takeaway is that even a seemingly invincible foe can be defeated if a society stands firm, an inspiration for Taiwan’s own effort to resist a feared invasion by China. Others draw the opposite lesson from the images of smoldering Ukrainian cities. Anything is better than war, they say, and Taiwan should do all it can to avoid provoking Beijing’s wrath, even if that means painful compromises.

These two competing visions will play out in Taiwan’s presidential elections, slated for January, and shape how the island democracy revamps its defenses as China’s military might expands. The soul-searching inside Taiwan, and the determination with which it will strengthen its armed forces, is also bound to affect the extent to which the U.S. will get involved militarily should Beijing try to capture the island, home to 24 million people—and most of the world’s advanced semiconductor production capacity.

While Taiwan has been living under a threat of invasion ever since China’s Communist Party took control of the mainland in 1949, the Russian thrust into Ukraine drove home to many Taiwanese that war can erupt with little notice. Chinese leaders have intensified their rhetoric around Taiwan, repeating that they won’t rule out using force to achieve what they call “national reunification.” Beijing has also ramped up naval and air probes around the island that wear out Taiwanese defenses. The U.S. Central Intelligence Agency estimates that Chinese leader Xi Jinping has set 2027 as the deadline for his military to be ready to take the island.

“What Ukraine has underscored is that it’s not a remote possibility that an aggressive neighbor can unilaterally decide to take action against you. It’s a wake-up call,” said Enoch Wu, founder of the Forward Alliance, a nongovernmental organization that has started training Taiwanese civilians in emergency response and first aid. “The threat that we face is an existential one, and so our defense mission has got to involve the entire society.”

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The main opposition Nationalist Party, known as the Kuomintang, holds a different view. “We want to talk to the Chinese. We believe that we can have a dialogue with the Chinese. That will certainly de-escalate the tension, to make sure no accidental war, and for sure no intentional war, happens,” Kuomintang vice chairman Andrew Hsia said in an interview before departing on a trip to China in June, his second this year.

Ukraine’s tragedy has made an outreach to Beijing even more vital, he added: “In the past we talked about war, but now for the first time we saw in our living rooms, on television, all this destruction. Are we ready for that? I don’t think we are, I don’t think we are that resilient.”

The Kuomintang’s presidential candidate, Hou Yu-ih, pledged this week that he would return the compulsory military service length to four months after improving ties with Beijing.

Comment by Riaz Haq on July 6, 2023 at 4:50pm

India can aim lower in its chip dreams

https://www.reuters.com/breakingviews/india-can-aim-lower-its-chip-...


BENGALURU, July 5 (Reuters Breakingviews) - India’s semiconductor dreams are facing a harsh reality. After struggling to woo cutting-edge chipmakers like Taiwan Semiconductor Manufacturing (2330.TW) to set up operations in the country, the government may now have to settle for producing less-advanced chips instead. Yet that’s no mere consolation prize: the opportunity to grab share from China in this commoditised but vital part of the tech supply chain could pay off.

Prime Minister Narendra Modi wants to “usher in a new era of electronics manufacturing” by turning India into a chipmaking powerhouse. So far, the government has dangled $10 billion in subsidies but with little to show for it. Mining conglomerate Vedanta’s $19.5 billion joint venture with iPhone supplier Foxconn (2317.TW) has stalled; plans for a separate $3 billion manufacturing facility appear to be in limbo, Reuters reported in May. In a small win for the government, U.S.-based Micron Technology (MU.O) last week announced it will invest $825 million to build its first factory in India in Modi’s home state of Gujarat, though the facility will be used to test and package chips, rather than to manufacture them.

Even so, the Micron investment could pave the way for the country to move into the assembly, packaging and testing market for semiconductors, currently dominated by firms like Taiwan’s ASE Technology (3711.TW) and China's JCET (600584.SS). It’s not as lucrative as making or designing them but global sales are forecast to hit $50.9 billion by 2028, according to Zion Market Research.

An even bigger opportunity awaits in manufacturing what are known as trailing-edge semiconductors. Recently, New Delhi expanded fiscal incentives for companies to make these lower-end products in the country. It’s a far more commoditised part of the market but there’s much to play for. Analog chips, for example, are vital for electric cars and smartphones. Last year, sales grew by a fifth to $89 billion, per estimates from the Semiconductor Industry Association, outpacing growth for memory, logic and other types of chips.

The majority of the world’s trailing-edge semiconductors are currently made in Taiwan and China. So rising geopolitical tensions between Washington and Beijing, as well as worries of military conflict in Taiwan, will make India an attractive alternative for companies like U.S.-based GlobalFoundries (GFS.O) that specialise in this segment. Booming domestic demand is another factor: the Indian market is forecast to hit $64 billion by 2026, from just $23 billion in 2019.

Aiming lower could be just what India’s chip ambitions need.

Follow @PranavKiranBV on Twitter

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own. Refiles to add link.)

U.S. memory chip firm Micron Technology on June 28 signed a memorandum of understanding with the Indian government to build a semiconductor assembly and testing plant, its first factory in the country.

Construction for the $2.75 billion project, which includes government support, will start in August, according to Ashwini Vaishnaw, India’s minister of electronics and information technology in an interview with the Financial Times published on July 5, with production expected by the end of 2024.

Comment by Riaz Haq on July 29, 2023 at 7:27pm

China's top-ranking diplomat told Japan and South Korea their people can dye their hair blonde and make their noses sharper but that they'll 'never become Westerners,' urging them to work with Beijing instead

https://www.businessinsider.in/politics/world/news/chinas-top-ranki...


China's top diplomat Wang Yi reminded Japanese and South Koreans of their ethnicity.
He said they can "never become Westerners," calling for closer cooperation between their nations.

China's highest-ranking diplomat urged Japan and South Korea to cooperate more closely with Beijing, saying they can change their looks but will "never become Westerners."

"It doesn't matter how much you dye your hair blonde, how sharp you make your nose, you'll never become Europeans or Americans. You'll never become Westerners," Wang Yi told South Korean and Japanese guests at a conference in Qingdao on Monday.

"We have to know where our roots are," the diplomat said, according to a recording of the conversation shared by Chinese media.

Most Europeans and Americans aren't able to tell Chinese, Japanese, or Korean people apart, Wang added.

Wang, who was speaking at the annual International Forum for Trilateral Cooperation, said the three nations should raise a "clear signal" that they want to work together, adding that they should resist a "Cold War mentality" and push back against "bullying and hegemony."

The diplomat's comments come amid rocky US-China relations over Taiwan, chip restrictions, and accusations of Beijing spying on the US with a balloon. Tensions continued to sour in June as President Joe Biden called Chinese leader Xi Jinping a "dictator," as State Secretary Antony Blinken visited Beijing to ease the relationship between both nations.

South Korea and Japan, close US allies, have recently publicly aligned with Washington on several hot-button issues, releasing joint statements with the White House on Taiwan in the last two years. Both nations have also conducted high-profile military drills with the US this year.

Washington has sought to curb China's growing influence in the rest of Asia, as Beijing pursues closer ties with countries like Cambodia, Laos, and Myanmar.

Comment by Riaz Haq on September 5, 2023 at 4:43pm

A new Huawei phone has defeated US chip sanctions against China


https://qz.com/a-new-huawei-phone-has-defeated-us-chip-sanctions-ag...

The new Kirin 9000s chip in Huawei’s latest phone uses an advanced 7-nanometer processor fabricated in China by the country’s top chipmaker, Semiconductor Manufacturing International Corp. (SMIC), according to a teardown of the phone that TechInsights conducted for Bloomberg.

Huawei’s latest smartphone, the Mate 60 Pro, offers proof that China’s homegrown semiconductor industry is advancing despite the US ban on chips and chipmaking technology.


The new Kirin 9000s chip in Huawei’s latest phone uses an advanced 7-nanometer processor fabricated in China by the country’s top chipmaker, Semiconductor Manufacturing International Corp. (SMIC), according to a teardown of the phone that TechInsightsconducted for Bloomberg

A brief recent timeline of US chip sanctions against China
August 2022: The US Congress passes the CHIPS and Science Act, a law that approves subsidies and tax breaks to help jumpstart the production of advanced semiconductors on American soil.



September 2022: The Biden administration bans federally funded US tech firms from building advanced facilities in China for a decade.

October 2022: The US commerce department bars companies from supplying advanced chips and chipmaking equipment to China, calling it an effort to curb China’s ability to produce cutting-edge chips for weapons and other defense technology, rather than a bid to cripple the country’s consumer electronics industry.



November 2022: The US bans the approval of communications equipment from Chinese companies like Huawei Technologies and ZTE, claiming that they pose “an unacceptable risk” to the country’s national security.

May 2023: Beijing bans its “operators of critical information infrastructure” from doing business with Micron Tech, an Idaho-based chipmaker.



“In the AI garden, the seeds are the AI software frameworks—which China already has access to. The plants in the garden are the AI models in use, which again are already available to Chinese AI companies. Nvidia provides the best shovels and pruning shears to tend the garden, but not the only means to tend it. So it doesn’t make sense to try to build a high wall around it...[T]o over-regulate these chips creates the risk that the US could fumble away its technology leadership. Would you rather have Chinese AI customers continue to fuel Nvidia’s growth and success? Or would you rather they spend their yuan to fuel the growth and success of Chinese suppliers?”

—Patrick Moorhead, a tech analyst, writing in Forbes in July 2023

One big number: China’s hoard of Nvidia chips
$5 billion: The value of orders that China’s tech giants have placed with Nvidia for its A800 and A100 chips, to be delivered this year, according to an August report by the Financial Times. The biggest internet giants—Baidu, ByteDance, Tencent, and Alibaba—have placed orders totalling $1 billion to buy around 100,000 A800 processors. Given that the US is mulling new export controls, Chinese companies are rushing to hoard the best chips on the market to train their AI models and run their data centers.

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