It has become fashionable to argue these dayThis s that America can thwart China’s rise to ‘great power’ status by using an embargo on the export of hi-tech equipment to China. opinion piece in Bloomberg says that such a point of view is not based on fact.
Firstly, for many thousands of years, the Chinese have shown themselves to be high quality original thinkers and inventors: “The Chinese had developed sericulture thousands of years ago, managing to keep the techniques for turning caterpillars into clothing a secret for hundreds of years. But the rulers of China needed Central Asian horses to wage war and control their territory (As Jessica Rawson explains in her magisterial Life and Afterlife in Ancient China, the soil in the Yellow River valley doesn’t have enough of the selenium required for the strong bones and muscles of military breeds). And so they traded silk for the right animals and quickly generated demand for the fabric outside the country. Because silk was key to China’s martial-equine needs, its secrets were strictly controlled. Breaking the sanctions could lead to death…
Porcelain — which sparked a health and sanitation revolution because of the ease with which it could be cleaned — was also much desired outside the Chinese world. So much so that China is still a synonym for the wares. From the 12th century on, Chinese emperors used the ceramics in much the same way they used silk, to gain influence over neighboring countries they wished to cultivate for reasons of prestige or policy. At the same time, traders would sell plates and jars designed for specific markets in the Islamic world and in Europe. It was not until the 18th century that factories in Meissen in Germany and Limoges in France discovered the kind of clay required and figured out the firing techniques to create true porcelain.
The story of tea is more familiar but still fraught with residual geopolitical indignation to this day. As with the Romans, the British faced a huge deficit because China dominated one product, in this case, tea.”
The article argues that just as China struggled to maintain a monopoly on its wonderful inventions, so to with America. Specifically, it is all but inevitable says this opinion piece, that American semiconductor tech will leak through to China: “China appears to have built a chip that matches some of the West’s most advanced semiconductors. While it may alarm US defense experts and sanctions proponents, the development shouldn’t have been too surprising. Industrial secrets are impossible to keep for long, as the Chinese themselves know from millennia of what we’d now call intellectual property lost by way of trade, theft and war. No one has a monopoly on innovation.
The progress toward parity with the West was revealed in a teardown conducted for Bloomberg News of the latest smartphone from Huawei Technologies Co, which utilises a chip made by Shanghai-based Semiconductor Manufacturing International Corp. The Kirin 9000s chip is still two generations behind the most advanced Western products. At 7 nanometers, it will soon be outdistanced by the even thinner 3-nanometer chip that Apple Inc will use in its next iPhone. Still, it reflects a porousness that lets knowhow slip through stringent US sanctions…”
If you want to read our other published material, please visit https://marcellus.in/blog/
Note: The above material is neither investment research, nor financial advice. Marcellus does not seek payment for or business from this publication in any shape or form. The information provided is intended for educational purposes only. Marcellus Investment Managers is regulated by the Securities and Exchange Board of India (SEBI) and is also an FME (Non-Retail) with the International Financial Services Centres Authority (IFSCA) as a provider of Portfolio Management Services. Additionally, Marcellus is also registered with US Securities and Exchange Commission (“US SEC”) as an Investment Advisor.
