
Huawei Reveals the Real Trade War with China - alanwong
https://www.bloomberg.com/news/articles/2018-12-06/huawei-bust-signals-the-real-u-s-trade-war-with-china
======
forrestbrazeal
The article alludes to, but doesn't expand on, the US's lost lead in furniture
manufacturing. For more on this fascinating story, I recommend Beth Macy's
"Factory Man" [0], the story of the systematic destruction of the North
Carolina and Virginia-based wooden furniture industry by Chinese imports.

It's the exact same playbook as Huawei -- govt-backed "dumping" of loss-priced
goods in an attempt for total market dominance. And US companies have
historically been way too willing to expose trade secrets to Chinese
manufacturers in exchange for temporarily cheaper supplies -- a Faustian
bargain.

[0] [https://www.amazon.com/Factory-Man-Furniture-Offshoring-
Amer...](https://www.amazon.com/Factory-Man-Furniture-Offshoring-
American/dp/031623141X)

~~~
sct202
In the case of furniture and other lower tech industries (clothing & textiles
too), when Chinese products got slapped with tariffs production shifted to a
different off-shore countries (Vietnam, Bangladesh, etc). The structural
disadvantages that American manufacturing has doesn't go away, and honestly
how many trade secrets are there to producing furniture. It's not like they
don't have furniture already in the rest of the world.

~~~
gman83
But presumably they won't be sold at a loss in a bid for market dominance.

~~~
rjzzleep
Funny, because that seems to be precisely what Uber is all about.

------
andor
_" The U.S. still makes — or at least, designs — the best computer chips in
the world. China assembles lots of electronics, but without those crucial
inputs of U.S. technology, products made by companies such as Huawei would be
of much lower-quality."_

The accusations against Huawei are coming at a time where this is simply not
true anymore. Huawei are making their own chips under the HiSilicon brand.
Just like Qualcomm chips, their CPU part is based on ARM IP, and ARM are based
in the UK and owned by SoftBank. The current Kirin 980 is the fastest non-
Apple SoC available on the market and as power efficient as the A12.

[https://www.anandtech.com/show/13503/the-
mate-20-mate-20-pro...](https://www.anandtech.com/show/13503/the-
mate-20-mate-20-pro-review/3)

~~~
throwawayFive
The Kirin 980 SoC uses the Cortex-A76 which was designed in Austin, TX, United
States of America.

The statement "The U.S. still makes — or at least, designs — the best computer
chips in the world" is accurate in the context of a manufacturer attempting to
build a high-performance microprocessor-based device.

~~~
StudentStuff
Exactly, thus far China doesn't have the technology to do sub-14nm foundry
work at any notable scale, and as we saw with Dhyana, they apparently don't
have the internal talent to improve AMD's Zen cores. The foundry issue isn't
apt to change anytime soon, as newer nodes are extremely expensive and take
years to bring up (see Global Foundries & Intel's troubles with newer
processes).

------
adgjl
Reading Michael Pillsbury will help you understand actions by the US admin
against China. His book, the hundred year marathon, states the theory it
subscribes to according to Bloomberg and Politico (I dont know how true the
theory is and some China experts disagree with the book)

"But what if the “China Dream” is to replace us, just as America replaced the
British Empire, without firing a shot?

Based on interviews with Chinese defectors and newly declassified, previously
undisclosed national security documents, The Hundred-Year Marathon reveals
China’s secret strategy to supplant the United States as the world’s dominant
power, and to do so by 2049, the one-hundredth anniversary of the founding of
the People’s Republic. Michael Pillsbury, a fluent Mandarin speaker who has
served in senior national security positions in the U.S. government since the
days of Richard Nixon and Henry Kissinger, draws on his decades of contact
with the “hawks” in China’s military and intelligence agencies and translates
their documents, speeches, and books to show how the teachings of traditional
Chinese statecraft underpin their actions. "

[https://thehundredyearmarathon.com/](https://thehundredyearmarathon.com/)

[http://www.michaelpillsbury.net/](http://www.michaelpillsbury.net/)

[https://www.bloomberg.com/news/articles/2018-09-27/trump-
ide...](https://www.bloomberg.com/news/articles/2018-09-27/trump-identifies-
the-leading-authority-on-china-who-is-he)

[https://www.politico.com/story/2018/11/30/trump-china-xi-
jin...](https://www.politico.com/story/2018/11/30/trump-china-xi-
jinping-g20-michael-pillsbury-1034610)

Competition to usd, Petroyuan is coming.

"The Rise of the “Petroyuan”

For the past decade, China’s strategy for internationalizing the renminbi has
involved greater reliance on the IMF’s Special Drawing Rights as an
alternative international reserve currency. But the launch of renminbi-
denominated oil trading this year suggests that China will now pursue de-
dollarization head-on."

[https://www.project-syndicate.org/commentary/rise-of-
petroyu...](https://www.project-syndicate.org/commentary/rise-of-petroyuan-
challenges-dollar-hegemony-by-john-a--mathews-and-mark-selden-1-2018-12)

~~~
protonfish
They can have whatever plans they want, it doesn't mean they have a remote
chance of success.

The natural resource of the information age is not iron or oil, but a populace
of free thinkers who are unafraid to fail while working outside of cultural
norms. Why does the US dominate the Internet? It's not because our 1s and 0s
are better quality, or our technology education is superior or even that we
have better funding for tech (it costs almost nothing to create a web site
except time, desire and expertise.) It's our culture: we value the pioneer
spirit. New frontiers are dove into head first.

China's recent successes can be attributed to intellectual theft from
innovative cultures, and brutal oppression of their own people. This does not
scale. Until they free the minds of their populace, they will never be able to
globally complete in science and technology.

~~~
rorykoehler
People have been saying China haven't a hope in succeeding since the 80s yet
here we are. Smashing everyone out of the water with ease. Doing the
unthinkable as a matter of fact. They play to win and they're good at it.

~~~
rellui
The thing is back in the 80's, China was starting from a low point. It's easy
to catch up which is what they've done but like the original poster said, it's
much tougher to take the lead position. I agree with him that the Chinese
culture makes it harder to innovate.

~~~
rorykoehler
While I can see the logic in the argument I think it doesn't reflect in
reality. For example they are miles ahead in stem cell research because they
pursue technological advancement with much less concern about morals and
regulation at the research phase.

~~~
pasabagi
Are they miles ahead? My impression of Chinese biology isn't that it's super
advanced - I mean, it's another subject, but consider the recent headlines
about the CRISPR baby. Ask any biologist about that experiment, and they'll
tell you it's not only the ethics that are seriously bizarre, but just the
idea that you should use something like CRISPR on a baby at this stage in the
technology's development. It's mad science, but it's not likely good science.

------
projectramo
Here is my confusion: if the war against China is really about high tech
dominance, and Huawei is a particular target because it just surpassed Apple
for #2 spot, then why isn't action taken against Samsung instead which is at
the #1 spot?

Samsung is not a Chinese company, so this seems to be about national
competition and not tech "dominance".

~~~
est
Samsung is the result of US's stripping of Japan's manufacturing power. Japan
used to challenge US's hi-tech status in the 70s and 80s. US forced Japan
signing the "Plaza Accord" and immediately Japan entered the "lost decade",
and so the chip manufacturing power was strategically moved to Taiwan and
S.Korea.

Now it's turn for China.

~~~
pkhagah
One thing I don't understand is how US, Japan and S.Korea led high-tech
outsourced manufacturing efforts in China. As far as I understand everything
is hunky dory starting with _Good will_ from Deng, until China became world's
manufacuting hub. Only then it became a huge issue. My question is didn't any
one consider China's current rise in late 80's and early 90's when they
started outsourcing manufacturing?

~~~
onemoresoop
I think the idea was to let china do the dirty work of manufacturing and
staying at that. That didn't work as we we can now see. And I'm blaming the
west's confidence of conveniently outsourcing the production to China thinking
they'll always be in control.

------
Tor3
ZTE was close to breaking point while they were blocked from US components,
until that sanction was lifted (after the big fine). According to the
Bloomberg article there may be a similar deal for Huawei - pay a huge fine or
get locked out. What will obviously happen is that the Chinese will not, can
not, accept that they're depending on US components when they could get locked
out from them at any moment. They will therefore accelerate, by whatever means
(research, hack, steal, invent, anything) their own ability to produce all the
parts themselves. In short, putting the squeeze on China will only hold back
the tide for a moment, and then backfire.

~~~
burfog
This is awfully similar to when China refused to sell rare-earth element
metals, causing the USA to restart production.

------
peter_retief
I find the term trade war misleading, its really just countries trying to
protect their intellectual property from theft by China. Money made in the
skewed trade deals is used to swop debt for equity in failing economies in
Africa, South America and Asia. Further, buying of technology companies in
developed economies is another way to duplicate the technology in China to
achieve global dominance. Don't forget that China has a political objective,
its not all trade and fair play

~~~
zabana
> China has a political objective

And the US doesn't ?

~~~
peter_retief
I often hear that China is a victim of a US trade war, in fact its often
framed as Trumps trade war. China is a very aggressive protagonist and we
should be wary of the politically correct narrative that is being used to
mollify the west. So of course the US is political and it needs to stand up
for its own society

------
mark_l_watson
“‘U.S. moves against Huawei and ZTE may be intended to force China to remain a
cheap supplier instead of a threatening competitor.“‘

This is what I also first thought when hearing about the arrest. This is all
about economic warfare. Long term, I think this will be bad for my country
(USA) because this will induce China to continue a huge national program to
develop home grown tech.

~~~
Lio
On the other hand China is already committed to undermining US market
dominance anyway.

So maybe this just buys US industry a little more time.

Allowing a foreign competitor to grow to a dominant position by skirting
sanctions or from profiting from state-sponsored industrial espionage is not
good either.

------
dalbasal
Anyone know of big, marquee examples of "trade secrets & technologies" handed
over to chinese affiliates. I hear reference to this all the time, but have a
hard time "putting meat on it."

Any nice clean examples where a chinese company gets IP/secrets that a French
company would not have got?

~~~
patrickg_zill
Qualcomm deal with ARM cpu development that they recently canceled (ip stays
with the Chinese joint venture) :

[https://www.pcworld.com/article/3163189/components-
processor...](https://www.pcworld.com/article/3163189/components-
processors/new-made-in-china-chip-on-the-way-as-country-boosts-indigenous-
tech.html)

------
ezVoodoo
So China's only choice is to stay as a cheap supplier of the US forever? That
sounds fair...

------
ramblerouser
The US should ban export of all high tech related IP to China as a national
security concern. The wholesale outsourcing of decades worth of our hard
earned technological innovation is treasonous. China would never give us
access to that kind of tech if it were developed in China.

~~~
cyphar
Can you explain how it is a national security problem (I didn't understand
that phrasing in the article either)? But you also might be forgetting that
almost all hardware is manufactured in China (and thus they could easily
reciprocate such actions).

~~~
ramblerouser
The ease with which China can disrupt our supply chain (in the short term) is
precisely the point. Their theft of millitary and comercial secrets is
another.

China requires american companies selling or manufacturing in china to divulge
secrets and implant chinese nationals (agents of the communist party) into
said american companies so they can copy our technology and use state funds to
begin competing chinese owned companies. This has hollowed out the American
manufacturing base. Fewer qualified American engineers and workers means less
military readiness, especially against threats China doesnt want us engaged
with. Think Russia.

This process also means that their military will both have a larger industrial
base to support it, and better technology to arm it.

The USA is not a tool for the Chinese to extract reasources and knowledge
from. We worked hard to get where we are, and they are illegally piggybacking
on us by stealing our intellectual property.

------
sonnyblarney
She created a subsidiary company in Hong Kong, bought products made in the US
and sold them to Iran.

The investigation started long ago.

This may just be a case of bad timing.

Who knew that an exec of a US competitor just also happened to be corrupt?

It doesn't make sense in the context of the trade deal, the better reality is
that it's actually just the US locking down on people breaking the sanctions.

~~~
majia
Based on available public information, the case happened about eight years
ago, and Meng was not a top executive at Huawei. At that time there were many
companies in China and elsewhere selling US products to Iran. Huawei allegedly
sold about 1 million dollar goods for civilian use. The selective law
enforcement in this case is rather curious:

Why would the US persecute this particular case so vigorously? Extradition is
not very common for crimes of this level of severity.

Why would the US want to have someone physically arrested instead of to punish
Huawei with fine and export ban, which are more common for companies violating
sanctions?

Why would the US choose to arrest the daughter of Huawei's founder, instead of
someone who is more directly involved in the Iran deal?

It is hard to believe this is a case of bad timing. There has been lots of
infighting within the Trump administration. Most likely, the hawk fraction
intentionally chose to arrest Meng at the time of Trump-Xi meeting in order to
undermine a possible trade deal by embarrassing China. Think about what
happens if China arrests Tim Cook because Apple didn't pay the right amount of
tax in China eight years ago.

~~~
coldtea
> _Why would the US persecute this particular case so vigorously? Extradition
> is not very common for crimes of this level of severity._

To send a signal "we can go tough if you don't sit back and take it on our
trade terms (which have nothing to do with Iran)"

------
chadAnon69
Everyone trashed Trump for the solar tariffs but I liked it for this reason.
Sure, temporarily they get more expensive but what happens in 20+ years when
the world is reliant on solar power and China has a complete monopoly because
they played the long game and subsidized it until all competitors died out?

China is playing the long game, the west plays quarter to quarter because of
the stock market

~~~
java-man
and of course we don't want the free market to punish the incompetent and
reward the smart ones, do we?

~~~
chadAnon69
In what free market does a government subsidize a company and force
competitors to give their native companies their IP to do business?

China never cared about free trade, they use it like a weapon to beat
idealists like yourself over the head

What happens in 20 years when China has complete dominance of the solar market
and those "cheap" solar panels get tripled in price because there is no
competition left and the rest of the world can only grit their teeth?

~~~
dnomad
> In what free market does a government subsidize a company

The idea that the Chinese government subsidizes every Chinese company is
nonsense. This is just something that Americans need to believe because they
don't want to admit how extraordinarily inefficient their domestic industries
were before 2000.

> and force competitors to give their native companies their IP to do
> business?

This is hilarious. Nobody forces foreign companies to give away their IP.
These companies, which are supposedly the best in the world, analyze the trade
and make it voluntarily or walk away. It's called the free market. Remember
that?

> What happens in 20 years when China has complete dominance of the solar
> market

The irony here is that all the tariffs do is put America further and further
behind. The tariffs don't help America at all eg [1]. This should be obvious
to anybody who understands how solar works and knows that the real money is
not in panel printing.

[1] [https://www.forbes.com/sites/jillbaker/2018/04/06/tariffs-
on...](https://www.forbes.com/sites/jillbaker/2018/04/06/tariffs-on-chinese-
solar-products-are-set-hurt-the-u-s-rather-than-help-it-heres-
why/#3cc6b8ce1ea4)

~~~
NicoJuicy
All companies report to the party, there is no free market there.

XI is the new emperor for life

------
entity345
The US are at war with China. Trade is just one aspect.

The issue is that they cannot 'win' that war. They can only delay the rise of
China.

At the moment US' actions are uniting the Chinese people behind their
government so the Chinese might actually be able to (or forced to) take a
harder line on some issues.

~~~
zavi
Or 10 years will pass and China will be stuck with 400 million sick old people
slowly turning from the key asset to liability.

