Sovereign military action will only take place when the big bully tries to shutdown TSMC, as this would be a national security issue.
A reappraisal of China's semiconductor strategy
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Sovereign military action will only take place when the big bully tries to shutdown TSMC, as this would be a national security issue.
Hendrik_2000
Lieutenant General
China should not repeat the same mistake that the Japanese did.By signing Plaza accord Japan unwittingly condemn their semiconductor industry to death by forcing industry to buy american semi. Here is a good article revisiting plaza accord and compare it to present dispute between China and US. Hard as it is China should not give up supporting the semiconductor industry by agreeing for numerical import target
Another important lesson relates to Japan’s downplaying of its strong industrial policy, by accepting an increase of US semiconductor imports, effectively reducing the competitiveness of Japan’s own semiconductor industry. Similar lessons can be learned from Japan’s auto industry. As the Chinese government has more control over its economy than the Japanese, the US could become more demanding of China under the Trump administration.
Government intervention in the economy is a double-edged sword, as the US-Japan trade dispute revealed. On the one hand, it can support the development of strategic sectors, such as semiconductors. On the other hand, numerical import targets could reduce the county’s competitiveness, as revealed by the dismal fate of the Japanese sector after the US-Japan Semiconductor Agreement in 1986
Will China’s trade war with the US end like that of Japan in the 1980s?
The outcome of the US-China trade war is anticipated to be quite different from the experience of Japan in the 1980s and 1990s, due to China’s relatively lower dependence on the US and having learned from the Japanese experience.
BY: AND DATE: MAY 13, 2019 TOPIC: GLOBAL ECONOMICS & GOVERNANCE
This article was published by Latin Trade.
The US has been criticising China for its unfair trade practices and currency manipulation, which are strikingly similar to the US-Japan disputes in the 1980s and 1990s. The US criticised Japan for its large current account surplus, which resulted in long intense trade negotiations between the two governments, and a broad range of economic policies to reduce Japan’s excess savings. With a bit of hindsight, the US arguably successfully contained Japan’s rising momentum, and adapted itself to the new economic environment. With this background, the important question is whether China will have a similar fate as Japan, once the US-China trade disputes are done. Our take is definitively no.
In the big picture, Japan and China challenged the US hegemony at very different stages of their economic development. Arguably, Japan faced pressure from the US when it was close to its economic peak with an increasingly ageing population, and stagnant labour productivity. On the other hand, China’s GDP per capita was still small compared to the US, with a much younger population. Furthermore, China’s labour productivity has been improving rapidly, on the back of larger investments in manufacturing and infrastructure. In addition, while still at an early stage of economic development, China’s economic size is considerably larger than Japan at its peak, and takes up a significantly larger export share worldwide. Therefore, as China continues to climb up the technology ladder, its presence in the global economy is anticipated to increase, further challenging the US. In light of this, the outcome of the US-China trade war is anticipated to be quite different from the experience Japan had, not to mention China is less dependent on the US than Japan was, both politically and economically.
Arguably, Japan was an easy target for US bashing. After the second world war, Japan has been both politically and economically dependent on the US, resulting in limited bargaining power to counteract the US. Being less dependent on the US, China is in a better position to resist US pressure to adjust its economic policies in order to create demand for US products. This was especially the case for the exchange rate (with a massive appreciation of the yen), and a lax monetary policy to create more import demand from Japan. We should not expect China to follow Japan’s ‘forced’ exchange rate and monetary policy, as a strong renminbi could be the nail in the coffin for China’s structurally weaker exports and rising wages. What’s more, while strong domestic demand could generate imports from the US, excessive policy measures to stimulate growth could lead to an overly lax monetary policy, potentially feeding an asset price bubble, easily aggravated by China’s ageing trends in major cities.
Another important lesson relates to Japan’s downplaying of its strong industrial policy, by accepting an increase of US semiconductor imports, effectively reducing the competitiveness of Japan’s own semiconductor industry. Similar lessons can be learned from Japan’s auto industry. As the Chinese government has more control over its economy than the Japanese, the US could become more demanding of China under the Trump administration.
Government intervention in the economy is a double-edged sword, as the US-Japan trade dispute revealed. On the one hand, it can support the development of strategic sectors, such as semiconductors. On the other hand, numerical import targets could reduce the county’s competitiveness, as revealed by the dismal fate of the Japanese sector after the US-Japan Semiconductor Agreement in 1986. While the private sector could respond to the crisis more effectively, as the Japanese auto companies did by increasing foreign investments in the US, state ownership of Chinese companies could pose challenges for adapting to a changing economic environment.
All in all, with less dependence on the US, China is in a better position than Japan to resist adjusting its economic policies to meet US demand, thereby avoiding Japan’s dismal economic performance. While the government can support strategically important sectors to win global market shares, it should avoid numerical import targets, as they effectively reduced the competitiveness of the Japanese semiconductor companies. Furthermore, China should not follow Japan’s ‘forced’ exchange rate and monetary policy. A stronger renminbi could reduce foreign direct investment into China, and policy measures to stimulate growth could lead to an overly lax monetary policy, potentially feeding an asset price bubble, as experienced in Japan.
Because China is at an earlier stage of economic development, it is expected to challenge the US hegemony for an extended period of time. Therefore, the US-China trade war could last longer than the one with Japan. With China’s growth prospects still relatively solid – it will soon overtake the US economy in size and it does not depend on the US militarily – China will likely challenge US pressure in the ongoing negotiations for a settlement to the trade war. This also means that any deal will only be temporary, as the US will not be able to contain China as easily as it contained Japan.
Another important lesson relates to Japan’s downplaying of its strong industrial policy, by accepting an increase of US semiconductor imports, effectively reducing the competitiveness of Japan’s own semiconductor industry. Similar lessons can be learned from Japan’s auto industry. As the Chinese government has more control over its economy than the Japanese, the US could become more demanding of China under the Trump administration.
Government intervention in the economy is a double-edged sword, as the US-Japan trade dispute revealed. On the one hand, it can support the development of strategic sectors, such as semiconductors. On the other hand, numerical import targets could reduce the county’s competitiveness, as revealed by the dismal fate of the Japanese sector after the US-Japan Semiconductor Agreement in 1986
Will China’s trade war with the US end like that of Japan in the 1980s?
The outcome of the US-China trade war is anticipated to be quite different from the experience of Japan in the 1980s and 1990s, due to China’s relatively lower dependence on the US and having learned from the Japanese experience.
BY: AND DATE: MAY 13, 2019 TOPIC: GLOBAL ECONOMICS & GOVERNANCE
This article was published by Latin Trade.
The US has been criticising China for its unfair trade practices and currency manipulation, which are strikingly similar to the US-Japan disputes in the 1980s and 1990s. The US criticised Japan for its large current account surplus, which resulted in long intense trade negotiations between the two governments, and a broad range of economic policies to reduce Japan’s excess savings. With a bit of hindsight, the US arguably successfully contained Japan’s rising momentum, and adapted itself to the new economic environment. With this background, the important question is whether China will have a similar fate as Japan, once the US-China trade disputes are done. Our take is definitively no.
In the big picture, Japan and China challenged the US hegemony at very different stages of their economic development. Arguably, Japan faced pressure from the US when it was close to its economic peak with an increasingly ageing population, and stagnant labour productivity. On the other hand, China’s GDP per capita was still small compared to the US, with a much younger population. Furthermore, China’s labour productivity has been improving rapidly, on the back of larger investments in manufacturing and infrastructure. In addition, while still at an early stage of economic development, China’s economic size is considerably larger than Japan at its peak, and takes up a significantly larger export share worldwide. Therefore, as China continues to climb up the technology ladder, its presence in the global economy is anticipated to increase, further challenging the US. In light of this, the outcome of the US-China trade war is anticipated to be quite different from the experience Japan had, not to mention China is less dependent on the US than Japan was, both politically and economically.
Arguably, Japan was an easy target for US bashing. After the second world war, Japan has been both politically and economically dependent on the US, resulting in limited bargaining power to counteract the US. Being less dependent on the US, China is in a better position to resist US pressure to adjust its economic policies in order to create demand for US products. This was especially the case for the exchange rate (with a massive appreciation of the yen), and a lax monetary policy to create more import demand from Japan. We should not expect China to follow Japan’s ‘forced’ exchange rate and monetary policy, as a strong renminbi could be the nail in the coffin for China’s structurally weaker exports and rising wages. What’s more, while strong domestic demand could generate imports from the US, excessive policy measures to stimulate growth could lead to an overly lax monetary policy, potentially feeding an asset price bubble, easily aggravated by China’s ageing trends in major cities.
Another important lesson relates to Japan’s downplaying of its strong industrial policy, by accepting an increase of US semiconductor imports, effectively reducing the competitiveness of Japan’s own semiconductor industry. Similar lessons can be learned from Japan’s auto industry. As the Chinese government has more control over its economy than the Japanese, the US could become more demanding of China under the Trump administration.
Government intervention in the economy is a double-edged sword, as the US-Japan trade dispute revealed. On the one hand, it can support the development of strategic sectors, such as semiconductors. On the other hand, numerical import targets could reduce the county’s competitiveness, as revealed by the dismal fate of the Japanese sector after the US-Japan Semiconductor Agreement in 1986. While the private sector could respond to the crisis more effectively, as the Japanese auto companies did by increasing foreign investments in the US, state ownership of Chinese companies could pose challenges for adapting to a changing economic environment.
All in all, with less dependence on the US, China is in a better position than Japan to resist adjusting its economic policies to meet US demand, thereby avoiding Japan’s dismal economic performance. While the government can support strategically important sectors to win global market shares, it should avoid numerical import targets, as they effectively reduced the competitiveness of the Japanese semiconductor companies. Furthermore, China should not follow Japan’s ‘forced’ exchange rate and monetary policy. A stronger renminbi could reduce foreign direct investment into China, and policy measures to stimulate growth could lead to an overly lax monetary policy, potentially feeding an asset price bubble, as experienced in Japan.
Because China is at an earlier stage of economic development, it is expected to challenge the US hegemony for an extended period of time. Therefore, the US-China trade war could last longer than the one with Japan. With China’s growth prospects still relatively solid – it will soon overtake the US economy in size and it does not depend on the US militarily – China will likely challenge US pressure in the ongoing negotiations for a settlement to the trade war. This also means that any deal will only be temporary, as the US will not be able to contain China as easily as it contained Japan.
One industry insider with contacts in Taiwan says that American officials are pressing Taiwan Semiconductor Manufacturing Company (tsmc), a big and cutting-edge chipmaker, to drop Huawei, which is its third-biggest customer. That would be a crushing blow, for Chinese chip factories are not up to the task of manufacturing HiSilicon’s sophisticated designs. tsmc’s only peer is Samsung—and South Korea is another of America’s allies. tsmc said on May 23rd that it would continue supplying Huawei for now.
Jura The idiot
General
now I read
China’s cybersecurity laws may be used to block US tech firms on national security grounds, says expert
China’s cybersecurity laws may be used to block US tech firms on national security grounds, says expert
- The draft measures have been released online for public feedback until June 24
- They were published amid escalating trade war tensions between Beijing and Washington
It's troubling that TSMC is coming under pressure, but I agree with the poster who argued that cutting off trade with Taiwan in that situation is far more effective than military action. In any event, that's not the most important part of the article you posted; this is:
Finally, they get it!
Then Huawei should forget about 7 nm chip and downgrade to 14nm and use SMIC.
The lesson is don't use it if you don't own it.
If both Samsung and TSMC dropping Huawei, China government might as well seize their Fabs in China and put them under Chinese control. Seizure of their equipments.
The lesson is don't use it if you don't own it.
If both Samsung and TSMC dropping Huawei, China government might as well seize their Fabs in China and put them under Chinese control. Seizure of their equipments.
Fully agreed.
manqiangrexue
Brigadier
If Huawei downgrades its 7nm chips to 14nm, what is the expected reduction to the performance of its phones from a user standpoint? Is it barely noticeable, clearly noticeable but still competitive, or does it severely handicap the phone rendering it non-competitive?
PikeCowboy
Junior Member
seizure is bad publicity, forced sale to a domestic competitor is more kosher, like what US is doing for grindr
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