Chinese plans for world technology domination foiled again. For now.
Courtesy of Ultimi Barbarorum
It all seems to be going wrong for Chinese-American trade relations. Late last month Tsinghua University’s purchase of a minority stake in Western Digital was referred to CFUIS, the panel determining if global M&A involves a US national interest. This, contra lots of commentary at the time, wasn’t business as usual, rather the US government drawing a very thick red line around China and saying no nationally significant technology, in this case semiconductor memory, crosses this. And this week the US kicked the feelings of the Chinese People in the goolies by sticking it to ZTE, one of their national tech champions, for selling stuff to supposedly Bad Countries like Iran.
The net effect of this in the near term is bad news for much of the listed semiconductor equity in the US, as a potential purchaser of last resort is removed. Longer term, no-one knows, not even Baruch.
As I’m sure you know, China is definitely an ex-agricultural, industrial economy, but not “post-industrial” like the rest of us. Their unelected government’s legitimacy depends on them getting developed quick, so they want things that can get them there faster, namely technology. Back in the day the best way of getting technology was simply to steal it, to “copy with pride” as the ex-boss of Nokia once put it*.
Chinese companies worked out very early how to make cars that go, sometimes safely, and cellphones you can talk on which only rarely exploded. Things moved fast, thanks to some extremely talented engineering and a bit of borrowing, and soon near-perfect non-exploding copies of the next iPhone were coming out of backrooms in Shenzhen before the handset they were copying came out of Apple’s factories in, er, Shenzhen. Chinese technology has moved on and they now make the best value high spec smartphones around, probably the base station you are using to read this on your mobile (unless you’re in the US), and some interesting looking cars.
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