How China Could Replace all US Technology

Discussion in 'Strategic Defense' started by AndrewS, Jun 21, 2019.

Thread Status:
Not open for further replies.
  1. AndrewS
    Offline

    AndrewS Senior Member
    Registered Member

    Joined:
    Oct 5, 2015
    Messages:
    1,758
    Likes Received:
    2,704
    Given the events of the past 2 years, there has been a sputnik moment in China in terms of technology reliance.

    There is now widespread agreement by Chinese tech companies that they can no longer rely on US technology, and have to eliminate that dependence. Indeed, Huawei has no choice but to do this.

    With enough time, this goal is achievable, given the size of China's domestic market and R&D resources.

    China has a population of almost 1.4Billion consumers which is larger than the combined population of the USA+Europe+Japan (who account for the vast majority of the wealthy, developed hi-tech world).

    So the Chinese market for many goods and services is already larger and has much more internal competition as well.
    For example, China has sales of 400M smartphones per year, which is greater than the rest of the developed world (US+EUR+JP). And the choice of phone models in a store is ridiculous.

    ---

    But going forward, let's look at what might happen

    GDP Growth Projection
    Let's say China's growth slows down further to 6% per year until 2025, which should be feasible.
    That means GDP per capita (PPP) grows from $19K today, to $27K. That's approaching high-income status.
    So the Chinese economy would grow from $27Trillion today, to $38 Trillion in PPP terms.
    The US will be significantly smaller - a maximum of $25Trillion in PPP terms.

    R&D Growth Projection
    At the same time, R&D spending undergoes a steady increase from 2.5% today, to 3.1% in 2025 (The other East Asian Economic Tigers like JP, KR, TW spend more than this)
    You end up with R&D spending of around $600B today, growing to $1200Billion in 2025. Again this is PPP.
    That is roughly same as what I expect the combined R&D spending of the US+Europe+Japan to be.

    Given that level of R&D spending, and the size of China's domestic market, it would be feasible for Chinese companies to eventually replace all US technology and grow into global technology giants in every sector.

    As for European and Japanese technology, I think Chinese companies would prefer to keep their existing supplier relationships. But if they end up following US export bans, then new Chinese technology giants will emerge inside China, and then expand into global competitors.

    Note that this analysis takes us to 2025 where the average GBP per capita in China is only $27K
    That is still less than half the US level, so theoretically China could still grow relatively fast and double the size of its economy again.

    ---

    So in summary, we could see a very large increase in absolute R&D spending in China just in the next 6 years.
    And there is actually very little that the USA can do to derail this trajectory.
    They can slow it down, but at the cost of a much more hostile relationship with China.

    Because at the end of the day, China's economic and technology development will be driven by internal factors, as it is no longer an export-driven economy, but is moving towards high-tech companies and high-income levels

    And even if you model using nominal exchange rates instead of PPP, you still end up with the same results, but it just takes a longer time.
     
  2. Arkboy
    Offline

    Arkboy New Member
    Registered Member

    Joined:
    Jun 10, 2019
    Messages:
    27
    Likes Received:
    65
    It is a good wake up call for sure. Imagine if the Huawei ban did not happen in 2019 but five years down the road. By then Android, and all US components would be that much entrenched in the Chinese companies and their supply chain, that a ban at that point would be exponentially more difficult to recover from.

    Same way, nowadays everyone in the West seems to be using facebook, gmail, twitter, etc... imagine if the CCP never blocked these sites and services, one day American decides to cut all access of these to China, and the Chinese people will be sitting ducks if they had relied on these platforms instead of their own... all of a sudden a nation of 1.4 billion people will lose access to their emails, to their instant messaging platforms, to their google maps, and this and that... which is an unacceptable position for China to be in. (ironically this is the same rationale that US is using for the banning of huawei, that it is not acceptable for US national security that its instrastructure uses something built by a Chinese company etc; but unlike the US, China is not forcing OTHER companies and other nations to cut off American companies, ie China is not telling Japan or Spain or whatever that its citizens aren't allowed to use facebook etc )
     
  3. MrCrazyBoyRavi
    Offline

    MrCrazyBoyRavi New Member
    Registered Member

    Joined:
    Feb 23, 2017
    Messages:
    46
    Likes Received:
    36
    This is a bad approach . China shouldn’t do every thing on its own . Right now countries that have favourable opinion about china can’t export any thing to china unless its raw material. Hence almost all nation have a trade deficit to China. No nation like that. All of chinese allies are either in debt or some political crisis. China should constantly try to innovate new technology and try to reduce the dependence on western technology but in the mean time it should help allies grow its economy/ technology base so that china can create sino centric new economic/ technological sphere. China should free up its domestic market more for its allies and trusted partners and shun its market for hostile nations.
     
    KIENCHIN and vesicles like this.
  4. MrCrazyBoyRavi
    Offline

    MrCrazyBoyRavi New Member
    Registered Member

    Joined:
    Feb 23, 2017
    Messages:
    46
    Likes Received:
    36
    China should take lessons from USA how it helped nurture and facilitate growth of japan/korea , european nations . If your friend and allies are strong , then your whole team will be strong.
     
    Josh Luo and KIENCHIN like this.
  5. tidalwave
    Offline

    tidalwave Senior Member
    Registered Member

    Joined:
    Feb 10, 2015
    Messages:
    1,346
    Likes Received:
    1,268
    Huawei will have to play a critical role.
    If it can develope all the chips it needed even if some less capable ones. It have to develope the necessary analog and digital chips and sell to domestic markrt

    Next , ZTE will revolt against US due to ability to get the necessary chips from Huawei.

    Vivo , oppo, xiaomi able to get their hands on Huawei chips and ditch Qualcomm.

    Zhaoxin x86 processors come on board replace all Intel desktop and notebook market. Loongson will also play a role. Linux variants will replace Microsoft Windows.

    Hefei innotron will have DDR4 DRam onboard. Along with Korean players, along Yantze memory ,supplier of nand flash together can replace Micron.

    Equipment wise, it's the lithography equipment,. Provide funding to develope the lens technology needed to get a below 10nm equipment

    Once it has enough momentum , China government has to come out and forcefully bann US tech firms in China.

    This will be the final coffin to US tech.

    I think 5 years time needed to achieve the above if all go well.
     
    KIENCHIN and manqiangrexue like this.
  6. tidalwave
    Offline

    tidalwave Senior Member
    Registered Member

    Joined:
    Feb 10, 2015
    Messages:
    1,346
    Likes Received:
    1,268
    2019 is a crucial year

    1) yangtze memory finally came out with 32 layer nand, giving China the first nand player

    2) innotron will mass produce low powe DDR 4 DRAM for cellphone, giving China the first cellphone DRAM supplier

    3) SMIC will begin production with 14nm , giving China the first Finfet player.

    By end 2019, above will be done deal.
     
  7. vincent
    Offline

    vincent Senior Member

    Joined:
    Jun 20, 2012
    Messages:
    1,020
    Likes Received:
    1,598
    Try something called Google first

    Pretty sure Germany doesn't have much raw materials to export

    Exclusive: German trade surplus with U.S. declined in 2018 but was still almost 49 billion euros

    German exports to China increased by around 8 percent to 93 billion euros last year while imports from China rose by around 4 percent to 106 billion euros.
     
    Shaolian and antiterror13 like this.
  8. Peter2018
    Offline

    Peter2018 New Member
    Registered Member

    Joined:
    Mar 31, 2018
    Messages:
    86
    Likes Received:
    50
    Do they all use domestic equipment for production, including cooking equipment in their company cafeteria?
     
  9. vesicles
    Offline

    vesicles Major

    Joined:
    Apr 1, 2009
    Messages:
    3,832
    Likes Received:
    5,124
    I think it's a bad idea to "replace all US technology", a very bad idea.

    Many seem to have this misconception that, once you become independent and completely self-reliant, you will be strong and won't be held hostage by anyone else. At the surface, this may sound logical.

    However, this approach is fatally wrong. Once you become totally self-reliant, you have succeeded in completely isolating yourself. Yes, you don't depend on anyone else. At the same time, no one will depend on you either. Then, why does anyone want/need to ally with you?

    Keep in mind, there are no permanent friends or permanent enemies, only permanent interests. When you isolate yourself, no one shares any interests with you. then why does anyone want/need to side with you? How can you achieve anything when you are completely isolated with no friends?

    Just imagine, if your opponent interacts with everyone and their economy is interlocked with all other nations' economy, damaging your opponent's economy will hurt everyone else. So what do you think the rest of the world will do when you try to hurt your opponent? Everyone will band together to crush you because what you want to do will hurt everyone. And even more importantly, crushing you won't hurt anyone else. So what do you think they will do?

    What is happening now is actually a perfect example of why China needs to further expand their network of collaboration, importing as much as they can and exporting as much as they can. The more their economy is connected with the entire world, the more all others' interests will be aligned with the Chinese interests. When hurting China will hurt everyone else, China will be completely invincible. China no longer needs to tell other nations what to do. All of them will WANT to side with China for their own self-interests.

    Just look at the current public hearing about the new $300 billion tariff. Nearly all the American business leaders band together to oppose the tariff. This only happens when China is doing business with American companies and using American technology.

    Of course, you can close your doors and stop interacting with the world. We all know what will happen with isolation...
     
  10. Arkboy
    Offline

    Arkboy New Member
    Registered Member

    Joined:
    Jun 10, 2019
    Messages:
    27
    Likes Received:
    65
    Even Ren said China has to be open (BRI) to survive long term. It is about being the platform provider and central ecosystem at the top of the value chain. An iPhone that sells for $1000 only costs $400 to make, and of that, China only directly gets about $8. When Huawei and other Chinese firms came onto the scene, the profits went to them. Then they sell these successful phones to the rest of the world. It can only do this by being "open", and it is not good enough just to make hi tech stuff for your own country the big idea is to be the new hegemon ... By making domestic airplane like COMAC C919, China not only hedges an insurance policy against one day the possibly of both EU and US banning China from importing airbus or boeing, but also it gives the world a third option... and competition is good for the world. Likewise, Ark/Oak OS, if it goes as Huawei hopes, will give the world a healthy third option against the backdrop of the iOS/Android duopoly.

    It is about moving up the value chain and dominating the tech sector while selling the platform and ecosystem to the rest of the world. China cannot ever hope to achieve this when it cannot domestically make its own chips and jet engines.

    China needs to develop its own hi tech stuff to compete at the highest level by focusing on the top of the value chain. It cannot do this while remaining reliant on foreign tech.
     
    bluewater2012 and Shaolian like this.
Loading...
Thread Status:
Not open for further replies.

Share This Page