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Saturday, June 15, 2024

CHINA POST #514 COMMENT ON MEDIA COVERAGE OF CHINA

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Graham Perry
Graham Perry
Experienced Arbitration Lawyer | China & Chinese Business Affairs | Public Speaker/Lecturer.

#1   HUAWEI’S BOUNCE BACK

#2   CHINA’S SECOND LANDING ON THE FAR SIDE OF THE MOON.

#3   SHEIN AND UK STOCK EXCHANGE FLOTATION

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#1   HUAWEI’S BOUNCE BACK

       ‘PEARLS AND IRRITATIONS’

Kari McKern write in Australia’s Pearls and Irritations;-

Nvidia, a titan in the field of AI chips, has long been the provider of choice for cutting-edge AI applications. Its chips power everything from data centres to the latest game graphics, positioning Nvidia as a pivotal player in the AI revolution.

However, recent developments have seen Nvidia’s dominance challenged by Huawei, a company that has rapidly ascended in the tech world despite significant hurdles due to U.S. sanctions.

The core issue is the semiconductor bans the U.S. placed on Nvidia, initially aimed at curbing China’s access to advanced AI technologies. These restrictions, intended to slow China’s technological progress and maintain U.S. supremacy in critical technologies, have proven counterproductive.

Last year, Nvidia launched three new AI chips for the Chinese market, aiming to sustain its presence in China, where the company had earned 77% of its revenues over the previous year. The H20 chip was expected to be highly sought after, featuring nearly all of Nvidia’s best technologies. However, to comply with the Biden Administration’s directives to limit the performance of key semiconductor exports, Nvidia scaled back some of the export-qualified chip’s computing power.

In 2023, Nvidia held a 90% share of China’s AI chip market, with sales of $7 billion. Now, less than a year later, Nvidia is cutting prices to compete with Huawei in China and move its “Made for China” H20 AI chipset off the shelves.

What went so wrong, so fast? Seemingly out of the blue, Huawei introduced their own AI chip, the Ascend 910-B. Their new chip hit the Chinese market around the same time as the H20, and experts quickly benchmarked Huawei’s chip as better, both in performance and power consumption.

.Clearly, in retrospect, the restrictions intended to secure Nvidia’s share of the market have instead incentivised business decisions that have seen Nvidia’s share of the Chinese market drop from over sixty to below twenty percent, with the US rulings also impacting the company’s reputation in China and fanning speculation about the commercial risks of possible future restrictions on US technology exports.

 

GRAHAM PERRY COMMENTS;-

Keep in mind the pre-World War 1 image of the established nations working hard to keep a resurgent Germany off the Top Table. No Entry.

Today the US is trying hard to persuade the other developed nations – UK, the EU countries, Japan and Australia +++ to keep China in its place and, one hundred and ten years after the start of World War 1, war again beckons.

Among China’s goals has been the determination to achieve self-reliance in semiconductor technology. Huawei has led the way at a pace that has taken the US by surprise – this has forced the market leader, Nvidia, to review its pricing strategy in China.

China is gripped with a determination to Do It Yourself – self-reliance in other words – and to challenge “Western technological hegemony”.The 14th Five-Year Plan included specific goals to increase R&D spending and foster innovation within the fabrication and chip design industry, further demonstrating a long-held Chinese determination to achieve technological self-sufficiency in chip design and fabrication.

The West tried to “cut China off at the knees” but Beijing responded with financial assistance, policy incentives, and support for its supply chains and production ecosystems. As Kari McKern observes;- “By prioritising the development of homegrown technologies and reducing reliance on foreign suppliers, China has strategically positioned itself to continue to dominate the global stage and to further reshape the dynamics of international technology.”

China is a resilient competitor. It will make mistakes along the way, as this Column will always acknowledge but China addresses them, corrects them and maintains momentum and progress. China learned from its failings in the Great Leap Forward, the Cultural Revolution and the Tiananmin Incident. It also learned from the failings of the USSR. Mistakes, errors and bad decisions are ever-present. China’s achievement is to learn the lessons – and quickly – as Huawei’s bounce back reveals.

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#2    CHINA LANDS ON THE DARK SIDE OF THE MOON

        THE GUARDIAN – UK

China has landed its uncrewed Chang-6 lunar probe on the far side of the moon, marking an important step in the country’s 53 day mission to retrieve rock and soil samples from the “dark” lunar hemisphere, in what would be a world first.

The landing elevates China’s  space power status in a global rush to the moon, where countries including the US are hoping to exploit lunar  minerals to sustain long-term astronaut missions and moon bases within the next decade.

Professor Martin Barstow of the University of Leicester said the feat was a great technical success for the Chinese space programme. “Landing on the moon  is difficult, but doing so, on the far side, where communications are particularly difficult, is an enormous technical achievement.” he said. “We are not able to communicate with the far side directly from Earth, so other spacecraft need to be in orbit around the moon to relay commands and receive data.”

The Chang’e-6 probe is expected to collect about 2kg of rock and soil samples from a region withine one of the oldest craters on the moon, known as the South Pole-Aitken (SPA) basin. Then it must attempt an unprecedented launch from the far side of the moon.

The far side of the moon – sometimes called the “dark side” because it is not visible from Earth – is of considerable interest to scientists..

Prof Mahesh Anand, of the Open University, said “Scientific analyses of these returned lunar samples using modern analyticial methods and techniques  could reveal new insights into the formation and evolution of the moon and by extension that of the solar system itself”.

The Xinhua News agency said its work should be complete within two days and would involve grabbing specimens using a robotic arm and drilling beneath the surface.

The US is planning a crewed mission by 2026, with China aiming to launch one by 2030. The latter is also planning to create an inhabited  lunar base. Washington has warned  that China’s space programme is being used to mask military objectives”

GRAHAM PERRY COMMENTS;-

Interesting that the Guardian article ends with a warning from the US that China’s space programme exists to promote China’s military objectives. It is an attempt to deflect the significance that the 1949 “Sick Man of Asia” is now setting a fast pace in space exploration. We also need to be reminded that the US has 700+ military bases spread around the world. China has just one base. It is good to bear this in mind because the US is being challenged by China at a pace and in a manner that was considered unthinkable even ten years ago.

 

It is not simply the scale of China’s progress but what it means for the future of the world. In a phrase we will have to adjust to a multi-polar approach to the world. The US will remain large and significant but of greater relevance will be the emergence of new centres of world development that will curtail and restrict future US influence. Nigeria in Africa, Indonesia in Asia and Brazil in South America will set the pace of change. China will have a role to play but not as the omnipotent superpower that the US has been since the end of the USSR. The future is taking shape with a diminished role for the US which the US finds very difficult to accept.

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#3   SCHEIN AND UK STOCK EXCHANGE FLOTATION

        BBC NEWS

Shein, the controversial fast fashion giant whose popularity soared during Covid, may soon tighten its ties with the UK with plans to sell shares in the business on the London Stock Exchange. The Chinese firm could file the relevant paperwork as soon as this week, potentially valuing the company at $66bn (£51.7bn).

Shein’s formula of offering a huge range of cheap clothes – backed up by campaigns with social media influencers – has turned it into one of the biggest fashion retailers in the world. But it has faced severe criticism over its environmental practices, as well as allegations around the use of forced labour in its supply chain.

The platform is set to launch in the UK and Germany later, although no date has been specified. The company is looking at the UK as a place to sell its shares after facing hurdles and intense scrutiny in the US. Shein filed documents in the US last November.

Some US lawmakers raised concerns about Shein’s links to China as tensions between Washington and Beijing intensified. Shein relies on thousands of third-party suppliers, as well as contract manufacturers, near its headquarters in Guangzhou, China. It is able to turn around a new item in a matter of weeks, having sped up the “test and repeat” model, first used by the likes of Zara owner Inditex, where companies place small orders of clothing items, see how they perform with shoppers before ordering more if they are a hit.

If Shein chose the UK over the US, it would be a significant boost for the City of London. A UK share listing generates significant business for the wider financial services industry that still makes up more than 10% of the UK’s entire economy. The UK government has been scrambling to make the country more attractive for companies to set out their stall.

“This could be big news for the London stock market,” said Colleen McHugh, chief investment officer at Wealthify, the investment firm, told the BBC’s Today programme.

GRAHAM PERRY COMMENTS;-

The West, Japan, Australia are all in a quandry about what to do about China. On the one hand there is talk of “de-risking” and “de-coupling” whilst at the same time the UK Government is trying hard to induce China’s major retail company, Shein, to float on the London Stock Exchange.

Different groups in the UK have different interests. Some in the UK Conservative Government are encouraging Shein to go ahead with its proposed $50 billion floatation whilst others are keen to isolate China and to reject the Shein business proposal on human rights grounds. The Labour Party Opposition – likely to become the new UK Government on 4 July 2024 – has the same internal conflicts. The London Stock Exchange, however, is keen to attract Shein and give a boost to the business fortunes of the Exchange and UK Investors, too, are attracted by the remarkable profitability of the Chinese company. 

Shein has come under scrutiny because of its alleged links to the use of forced labour in China and the use of products alleged to be the fruits of China’s alleged genocide against the Uyghur Muslims – allegations denied by Shein.

Western journalists will, doubtless, be searching for evidence of human rights violations by Shein against its own work force in China and the whole issue will cover the wide range of contradictions that come into play when links with China are the subject of discussion.

The real issue, however, is the rise of China and a China which is not for turning. The Chinese government are shrewd and experienced – they have to be to have presided over the surge in development of its economy and its people’s welfare when compared with the ravaged destitution which characterised the new China in 1949 – the first year of the existence of the new Communist state. 137m Chinese travelled overseas in the last full year before Covid without any evidence of asylum applications – something to be expected if the allegations of hardship and persecution by the Government have any basis in truth.

Gradually, one by one, the policies designed to isolate China will founder. Building a coalition of countries eager to penalise China has encountered problems and obstacles ever since China’s opponents realised the enormity of the development underway in China. On the one hand the anti-China interests want to restrain, divert and deflect China’s chosen path of development. On the other hand within each country contemplating the isolation of China, there exists powerful economic interests keen to participate in the development of China – eager for a slice of the cake.

These inner struggles will continue. There will always be those who are keen to upset the growing influence of the Chinese Communist Party but their number will diminish over time as a realisation grows that China is not for turning and new business strategies will come to the fore.

China is not smug or complacent. Their government knows that carrying the new China – from 2049 – into its second century of existence will bring new problems and challenges and require adjusted policies to protect the country and keep it on the path of progress. The Shein issue throws the spotlight on China’s opponents and underlines the need – not for more attempts at isolation – but more initiatives to bring about increased harmony and deepening mutual interest between China and the increasing numbers of countries that are becoming China’s trade partners.  

GRAHAM PERRY

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