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Saturday, June 15, 2024

CHINA POST #516 CHINA AND THE FOREIGN MEDIA

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

GOOD MORNING FROM LONDON

#1   BIDEN’S TARIFFS ON CHINA

#2   SEMICONDUCTOR RIVALRIES REACH NEW PEAK

#3   THE FAR SIDE OF THE MOON

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“#1   BIDEN’S TARIFFS ON CHINA. WHY?

         SOUTH CHINA MORNING POST

“In a sweeping decision on China tariffs, the Biden administration decided to keep intact all the duties former president Donald Trump slapped on some US$300 billion of Chinese goods. Furthermore, it has imposed new, hefty tariffs on products such as semiconductors, ship-to-shore cranes, advanced batteries, solar cells, steel and aluminium – including a quadrupling of the tariffs on Chinese electric vehicles (EVs).

The Biden administration could have shown its professed commitment to the world trade body by ditching the duties. Instead, it chose to defy the WTO ruling and has gone further by expanding the tariffs.

Back in 2020, the US accused Huawei Technologies in a court case of stealing a long list of American technologies and trade secrets, which Huawei, already the leader in 5G technologies, denied.

There is also no capacity whatsoever in the United States to manufacture the kind of cranes the tariff targets. And its EV and solar power industries lag behind their Chinese counterparts. In these and other sectors, Chinese companies enjoy a technological edge over their American competitors.

The tariffs largely represent Washington’s efforts to reverse its fortune in sectors where the US is losing ground. Struggling to compete against China, it appears to increasingly find it necessary to upend the international rules.

WTO principles and rules are thus seemingly sacrificed to “outcompete China”. The US, the most conspicuous self-styled champion of the so-called rules-based international order, is in effect breaking the very rules it helped to write decades ago.

Whether China’s trade is fair is not for Washington to decide. As a WTO member, the US is expected to settle trade disputes with other members through the organisation. As the most litigious WTO member, the US has taken its grievances to the organisation without hesitation in the past, when it believed it had a strong case.

GRAHAM PERRY COMMENTS

Bear in mind the context – the wider picture – the world setting. This is about an established power, the US, coming up against a rising power, China.

The distribution of power around the world is never stable or settled. Change is always occurring and adjustments need to be made to accommodate the changes. The US has been the dominant world power for most of the 20th Century. It wants to remain dominant. The US has come to realise – quite late in the day – that there is a “newcomer on the block” and it is struggling to know how best to handle the challenge of China. This is a problem well known to History – just think of Gibbon’s Rise and Fall of the Roman Empire as evidence of the rise and fall of great powers.

Biden, like Trump before him, has tried to pummel China into submission – not (yet) with bombs and missiles – but hitherto with tariffs and trade bans.  The problem for the White House is that China enjoys in a technological edge in a wide range of business sectors. And there is more to come because China boasts the largest annual number of STEM graduates – Science, Technology, Engineering and Mathematics – year-on-year.

Biden will seek to present a united front against China and increase the protectionist approach to world trade. But as the EU shows, different countries have different priorities. France wants to ban the imports of Chinese EV’s into the EU to protect the sales in France of domestically produced Peugeot and Citroen cars whereas Germany opposes such a ban on Chinese manufactured EV’s into Germany because China will react with retaliatory restrictions on the sales into China of Volkswagen and Mercedes-Benz.

The space to watch is the increasing tension between the US and China as trade conflicts translate into military incidents.

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#2    SEMICONDUCTOR RIVALRIES REACH NEW PEAK

        WALL STREET JOURNAL

In a series of articles this week, Wall Street Journal reporters reviewed the: leadership of an industry expected to double in size by the end of the decade to $1 trillion

SOUTH KOREA

In early April, South Korean President Yoon Suk Yeol didn’t mince his words when describing why chips are paramount to the country’s economic survival.

“The competition over semiconductors unfolding now is an industrial war,” Yoon told government and industry officials. “An all-out war between countries.”

South Korea has a massive war chest prepared for future semiconductor manufacturing: roughly $450 billion in private investment alone. That is roughly the same amount earmarked currently for chip production in the US according to a recent industry estimate. With a plan sketched out to nearly 2050, Yoon’s government plans to support the creation of the world’s biggest chip-making cluster in South Korea, encompassing 37 factories, spanning eight cities and creating more than three million jobs.

THE GLOBAL CHIP POWER

Asia’s chipmaking champions in South Korea and Taiwan are U.S. allies often seeing eye-to-eye on security and politics. But on semiconductors, they are increasingly friendly competitors—and Seoul and Taipei, with clear advantages, aren’t sitting idle as Washington looks to muscle back into production.

The stakes are high for these chip-dominant economies. Semiconductors represent about one-fifth of South Korea’s exports. Unlike America’s Silicon Valley, Taiwan relies on a so-called Silicon Shield—the belief that its chip sector is so vital to global trade that it can deter a Chinese attac

US AND EUROPE

In 1990, the U.S. and Europe accounted for a combined 81% share of chip manufacturing worldwide. In the decades since, they have been overtaken by others. To be sure, American companies such as Nvidia, Qualcam design the world’s best chips But in recent decades, the ability to manufacture them has overwhelmingly resided in Asia.

The U.S.’s future gains as a chip maker could be amplified by extra rounds of congressional funding or a major leap from Intel the sole American company in the three-way race with TSMC and Samsung to produce advanced logic chips. Asia’s lead could also be imperilled should a military conflict break out in the Taiwan Strait or on the Korean Peninsula. 

Nvidia’s AI chips are crucial to technology from smartphones to chatbots. Their production is outsourced to just one company in Taiwan. With growing fears that China may stage an invasion of the island, the U.S. is racing to secure the supply chain.

CHINA

Adding to the competition, China in recent days pledged roughly $48 billion to its national semiconductor fund, the largest instalment ever. But with U.S. curbs in place, China’s ability to quickly compete on the high end with Taiwan and South Korea is likely limited despite the influx of government funds.

TAIWAN’S TECHNICAL ADVANTAGE

Five decades ago, Taiwan pivoted toward semiconductors as part of its industrial transformation. Chips represented roughly two-fifths of the island’s exports last year.

Chips made using TSMC’s next-generation 2-nanometer process are on track to be mass-produced in Taiwan first in 2025, with U.S.-based production of such chips expected in 2028.

GRAHAM PERRY COMMENTS;-

This Column has maintained its focus on semiconductors because the product is indispensable to the development of any modern economy and is high on the list of strategic planners in the capitals of the world. In the previous issue the focus was on the article by Mr Alperovitch which spelt out the US policy of curbing the development of China’s semiconductor sector.

The Wall Street Journal has assessed the world distribution of centres of semiconductor manufacture. The interesting outcome is that for quite different reasons the US and China both want to increase their domestic production of semiconductors. The US is very nervous at the world leadership of Taiwan in semiconductor producer. The US anxiety is the awareness that any hostilities over Taiwan will, at a stroke, bring an immediate stop to the exports of semiconductors to the US and bring to a speedy halt the large vehicle manufacture in the US.

The US wants to break its dependence on Taiwan – hence its investment in five new production centres including the largest facility in Phoenix Arizona. The US and Taiwan have different priorities. Taiwan wants to maintain its dominant world position just as the US wants to reduce the significance of Taiwan’s market share.

China’s needs are similar. They want to rely on their own production of semiconductors to downgrade the importance of imported product though China does have a dominant role in the production of ‘legacy semiconductors’ which is in big demand worldwide.

Economics and politics go hand-in-hand. Normally trade can be conducted without major disruption but semiconductors is one of the key exceptions – hence the prominence of this product in trade and political exchanges. For the US, Taiwan and China semiconductors is a priority item of manufacture, trade and delivery. A spark can start a prairie fire.

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#3     THE SIGNIFICANCE OF CHINA’S FAR SIDE OF THE MOON LANDING

                   THE UK GUARDIAN AND THE SOUTH CHINA MORNING POST

“It is difficult to convey the significance of this achievement, but it involves the implementation of various sophisticated spacecraft communication and mission control capabilities and several technological breakthroughs. This is taken together with the implementation of a careful lunar retrograde orbit design to insert the spacecraft into the correct path. Indeed — as there is no direct line of sight between the Chang’e 6 lander (and all its instruments) and Earth, it is instead necessary to use a special in-orbit “.

The Chang’e 6 lunar spacecraft landed on a carefully chosen spot on the lunar far side in the South Pole-Aitken Basin region. Its primary mission? To replicate the previous amazing Chang’e 5 mission’s success and bring about 2 kilograms of moon rocks back to Earth. Indeed, Chang’e 6 was originally envisioned as a backup mission for Chang’e 5 if things had gone awry. Happily, the tremendous success of Chang’e 5 enabled the CNSA to instead re-scope this mission to the lunar far side and hence provide the possibility for major new science in the process.

Why does this mission matter? First, this is only the second time in history that any spacecraft has landed on the lunar far side, and is also the second Chinese mission to achieve this, so double happiness. The lunar far side is never seen from Earth because the moon’s rotational period matches the time it takes for the moon to orbit Earth. The two are in so-called “lockstep”.

Second, this will be the first time in history that moon rocks from a completely different lunar geological environment can be transported back to Earth. As the latest Chinese lunar surface maps show, in their recently released excellent lunar atlas, the far side looks very different from the side we are all used to seeing. The far side has a far more battered terrain from massive bombardments of asteroids billions of years ago. No lunar “mare” is created from massive lava flows unlike the beautifully named Sea of Tranquility of Apollo fame on the near side. Indeed, the first Chinese lunar-rock sample return mission, Chang’e 5, was a treasure trove of geological surprises. The returned samples revealed the material was far younger than those large Apollo samples and, indeed, even the few hundred grams the Russians managed to return from the moon in the 1970s.

This raises interesting questions about the geological history and active processes at work on the moon at far later time periods than previously thought.

Back to Chang’e 6: The more-rugged far-side terrain makes landing a trickier prospect, so various new processes were employed to give the mission the best chance, including an autonomous obstacle avoidance system to automatically detect surface irregularities using a visible-light camera. This provided the data needed to select a safe landing area.

The combination then hovered about 100 meters above the safe landing area and used a laser 3D scanner to detect obstacles on the lunar surface to select the final landing site before a slow vertical descent. As the combination approached the lunar surface, it shut down the engine and touched down via free fall, protected by a cushioning system.

Shortly after the vessel’s landing, the lander lunar rock sampling technologies will be deployed to both scoop top-surface material with a robotic arm and use a drill to collect subsurface rocks to bring back to Earth.

THE INTERNATIONAL ELEMENT

One important additional fact to realize is that the Chang’e 6 lander is not just about the sample return mission, even if it is by far the most important. It is also an international endeavour, with several science payloads on the lander from France, Italy and Sweden; and a so-called iCube-Q CubeSat, deployed in lunar orbit from Pakistan. The international instruments on the lander include the Negative Ions at the Lunar Surface device, developed by Sweden and the European Space Agency; and the Detection of Outgassing RadoN device from France. There is also the Italian passive laser retro-reflector that precisely measures distances from the lander to lunar orbit.

QUENTIN PARKER  is Professor in the Faculty of Science at the University of Hong Kong, the director of its Laboratory for Space Research, and vice-chairman of the Orion Astropreneur Space Academy. He states;-

“I confess I remain bemused by some commentators who talk about how such missions “could” be a pathway to China emerging as a dominant space power when the reality, as far as I see it, is that it already is, with much more to come.”

GRAHAM PERRY COMMENTS;-

There are two aspects to this report of lunar breakthrough. First – that it has happened. Second – it has been carried out by China.

The world generally is fascinated by progress in space. One can remember the earthquake effect of the launch of the USSR Sputnik in 1957. For days the UK media questioned whether it had happened at all and whether Soviet technicians were engaged in making up the whole episode. It took Professor Bernard Lovell of the UK’s Jodrell Observatory Bank to confirm to the suspecting media that the Sputnik was real – as was Yuri Gagarin’s achievement in becoming the first human being to orbit the earth in 1961.

If you have grown up in post War UK, you will be familiar with the excitement generated every Friday when a popular comic – The Eagle – entertained us with the solar system exploits of Captain Dan Dare and his #2 Digby. Space and the exploration of the unknown has always stirred the imagination of people everywhere and there will be special interest this occasion because there is a First at work – the first landing on the far side of the Moon or the “dark side of the Moon.”

The second point is that this is the work, in the main, of China and again further evidence of its big strides forward. In the next issue of this Good Morning from London Column the focus will be on a report that has investigated the reasons for persistent adverse coverage of China by the UK media. The constant downplaying of China’s progress does encourage a negative attitude to China and an imbalance in the assessment of its development. This explains the comment of Professor Quentin Parker who remains bemused “by some commentators who talk about how such missions “could” be a pathway to China emerging as a dominant space power when the reality, as far as I see it, is that it already is, with much more to come.”

China has problems. It makes mistakes. It gets things wrong. It does not set up a Sub Postmasters type Commission of Enquiry but it does carry out a What Went Wrong investigation – and the fact that the Findings are not made public does not mean that the Enquiry does not take place. China could not have made the progress it has without a thorough review of mistakes as they occur. And this special trip to the Far Side of the Moon and with it the bringing back of vital samples taken from the Moon’s surface is evidence of the country’s growing confidence and achievement. No country has advanced along the path that China now travels and the people of the UK have to overcome the inflexible negativism of its media by searching out facts and information about China’s progress. We live in exciting times.   

GRAHAM PERRY

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