[Salon] How Sanctions Failed To Hinder China's Development

https://www.moonofalabama.org/2023/09/how-sanctioning-chinas-development-has-failed.html#more

How Sanctions Failed To Hinder China's Development

September 04, 2023

These headlines related to China are demonstrating a very fast historic development:

From the last link:

The Pentagon committed on Monday to fielding thousands of attritable, autonomous systems across multiple domains within the next two years as part of a new initiative to better compete with China.

The program, dubbed Replicator, was announced by Deputy Defense Secretary Kathleen Hicks, speaking at the National Defense Industrial Association’s Emerging Technologies conference here.

“Replicator will galvanize progress in the too-slow shift of U.S. military innovation to leverage platforms that are small, smart, cheap and many,” Hicks said.

China's industry developed by copying designs from other producers. But it only took a few years until it started to produce better or new products for new markets. Historically this is nothing new. Germany's industrial development happened by ripping off British manufacturing processes and products. A few years later industrial German products could compete with British ones and the Brits started to copy Germany technology.

In 2018 China demonstrated large swarms of coordinated drones that could draw moving pictures into the sky.

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Now the Pentagon wants to replicate such capabilities.

replicate: verb - If you replicate someone's experiment, work, or research, you do it yourself in exactly the same way.

I have been given a DJI drone as a gift. It is an excellent product. It is light enough to stay within legal limits. It has good flight characteristics, with excellent design and usability of hardware and software. It is reliable and comes at a reasonable price. Even the packaging was very well designed and underlined the value of the product.

Asides from way too expensive Apple products I am not aware of many U.S. or European mass market products that come near to its overall quality level.

If China's military gets drones of the quality that Chinese companies produce for consumers it is likely a generation ahead of everyone else.

It is doubtful that the Pentagon, with its lengthy procurement processes subject to Congressional graft, will ever catch up with that.

In 2019, when Trump sanctioned Huawei by denying it access to modern chips, I wrote:

Huawei currently uses U.S. made chips in many of its smartphones and networking products. But it has long expected the U.S. move and diligently prepared for it: 
...
Soon U.S. chip companies will have lost all their sales to the second largest smartphone producer of the world. That loss will not be just temporarily, it will become permanent.

The moment of reckoning has come.

Last week Huawei presented its new cell phone Mate 60 Pro. Since the sanctions were implemented the company has developed genuinely new CPUs for cell phones as well as for other equipment. Bloomberg reports of the teardown and preliminary analysis of the processor by a U.S. company. It is fairly complicated system-on-a-chip that is to 100% made in China:

tphuang @tphuang - 2:25 UTC · Sep 4, 2023

Kirin 9000S teardown so surprising

Includes CPU, GPU, 5G modem, ISP, DSP + NPU (w/ Ascend lite/tiny cores + TPU)

All this squeezed into 110mm2 die w/o stacking 
...
Oh, 9000S in teardown/testing showed better overall CPU performance & power consumption than 9000 & SD 888 + had better peak CPU performance than SD 8 Gen 1 all this w/o advanced packaging.

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Huawei could do this because it is an extraordinary company that was created by an extraordinary man:

Ren Zhengfei, founder and CEO of Chinese telecoms equipment maker Huawei Technologies, urged the US-sanctioned tech giant to maintain its technological lead in specific areas and focus on developing internal talent, according to his latest speech published on the company’s employee website on Monday.

“Huawei will save talent, not US dollars,” Ren said in the speech, which he delivered on July 28. “We will try hard to lead in some business aspects globally, not all aspects. For our products, the boundary can be relatively narrow, but our research boundary can be wider.”

In his July speech, Ren said the best motivation for talented workers is passion.

“I think the material reward is not that important,” he said. “The first thing is that [the worker] finds a position he has passion for … If he can work on something he is interested in, he will have no regrets.”

Ren added that no one is good at all aspects of a business from day one and that it takes time for people to grow their talents beyond a single specialised field. “[In time], you will see who becomes a leader. It’s a natural process,” he said.

That sounds like a company I would like to work for. Huawei's response to U.S. sanctions was not to give up but to hire more people:

Talent recruitment has long been important for Huawei. Ren initiated a programme known as “Top Minds” in 2019, just months after the company was blacklisted by the US government. That recruitment drive, later dubbed the “Genius Youth” programme, gave priority to candidates whose research had produced “tangible and impactful” results and winners of top research honours, according to an advertisement posted by Huawei on Weibo at the time.

Huawei has 207,000 employees globally, according to its website, and 55.6 per cent are research and development personnel. This is up from the end of 2021, when the company said it employed 195,000 people, with 54.8 per cent of them in R&D.

That is an extremely large research and development company to which a smaller production and sales arm is attached. Western finance and business attitude would never allow for something like it.

That is just one reason why the U.S. is losing the tech war with China:

Western media, for the most part, has ignored a remarkable array of Chinese pilot products in industrial automation, executed primarily by Huawei, the world’s largest maker of telecommunications infrastructure and the target of a global suppression campaign by the United States. Fully automated factories, mines, ports, and warehouses already are in operation, and the first commercial autonomous taxi service is starting up in Beijing. Huawei officials say the company has 10,000 contracts for private 5G networks in China, including 6,000 in factories. Huawei’s cloud division has just launched a software platform designed to help Chinese businesses build proprietary AI systems using their own data.

This again proves that sanctions cannot end development when a certain base is already there:

Restrictions on technology exports to China at best are a stopgap. Eventually, China, which graduates more engineers each year than the rest of the world combined, will develop its own substitutes, as ASML, the world’s premier maker of chip lithography equipment, avers. Even as a stopgap, though, the controls are failing. They impose high costs on China in several ways but have not impeded the Fourth Industrial Revolution. On the contrary: the limited adoption of Fourth Industrial Revolution technologies by American industry is concentrated in firms that have major commitments to China. 
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To maintain a technological edge over China, we will have to spend an additional several hundred billions of dollars, train a highly-skilled workforce, educate or import more scientists and engineers, and provide broader incentives to manufacturing. It is simply too late to try to suppress China. That is no longer within our power. What remains within our power is to restore American pre-eminence.

Well, good luck with attempting that.

Posted by b on September 4, 2023 at 15:57 UTC | Permalink

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