Flagship Chinese chipmaker collapses before it makes a single chip or opens a factory One of China’s next-generation chipmakers appears to have collapsed, potentially hampering the nation’s march to silicon-self-sufficiency. Chinese electronics industry journal Jiwei reported that Wuhan Hongxin Semiconductor has contacted its staff and told them the organization won’t attempt to continue building its facilities …
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They may have been banking on having "extracted" a copy of the latest blueprints from one of the other manufacturers somewhere else in the world but we're not successful.
The best kitchen in the world is useless when trying to bake a silicon cake without the recipe.
These is absolutely correct but unfortunately whenever comments like this are made there's a habitual shout of 'racist'. But people think with western heads - Chinese culture is very different to Western culture and what we see as stealing isn't seen that way.
They genuinely have a different idea of provenance - its worth visiting China to see this. Some of their attitudes are eyebrow raising to westerners and seem fraudulent. Equally they think the same of aspects of western culture.
But they do think stealing IP is fair game and we've been a bit gentlemanly in letting it go on unchecked, probably because there's an attitude that China is backward. It's not and neither are its people stupid. Stealing the IP of others lets them leapfrog in years and save huge amounts of R&D.
They actually seen what we call IP theft as free market economy. Rather than protectionism which is supposed to allow companies to recoup their investments through patents and such, they believe that everything that can be copied is open source and each copy will generally generate innovation and place pressure on all players to always make advances.
I am currently sitting just outside a semiconductor research facility as I write this. It makes high frequency radio semiconductors for communications. Almost all the technology inside is off-the-shelf and while they obviously make a buck off patents, everyone there knows that their real protection is research and progress. We have a real problem at this location because if the US government becomes protectionist against its allies, they’d have to just shut down.
The good news is, there is another building just off to the side which is a nanotechnology research facility that can produce everything without dependence on the US. So rather than investing massive sums of money in traditional semiconductors, they focus their efforts in nanotechnology as a replacement.
When China eventually catches up in semiconductor fabrication to the US, it will quickly surpass them as American companies will depend on protectionism. And even if the US were to undo all the restrictions Trump enacted this moment, China would still invest heavily in their own tech and will still pass the US since they have now learned that if it happened once, it can happen again. Not only that, but I imagine the facility I’m sitting at will start buying from China at least as much as from the US so they will never have to worry about being completely cut off.
The sanctions placed on China by the Trump administration will likely be the biggest boost to China that could have ever been possible. It will take China time to recover from it, but when they do, it will leave the entire rest of the world without any leverage when negotiating with the Chinese on political issues. At this point, Biden’s choice of leaving the sanctions in place does nothing other than provide a buffer to let countries outside of China get a running head start in a very very long race.
Please don’t assume I’m playing the Trump is evil card. With the rollout of 5G, if Huawei would have been able to keep going as they did, China would have been able to draw trillions of dollars more from the US treasury. I don’t agree with how Trump prevented this, I would have rather seen an executive order demanding Cisco or another US company produce a competitive offering. But it did accomplish mitigating the risk of China being able to simply collapse the US economy on a whim. The European approach of working on an open source RAN was a far better approach.
@CheesyTheClown You've nailed the hell out of that ... 100% spot-on.
Trump was a shorted-sighted moron, by stripping away Chinese access to US licensed tech, they'll simply roll their own - The only loser here is the US, including current and future income from licensing, the political capital and bargaining power it offered.
Protectionism will work in the short-term, but once China has established manufacturing, selling kit for 30-40% the cost that Western companies offer it for, over time more and more $$$ will be heading east, rather than west..
Don't get me wrong, competition between companies is a good thing ... But competition between countries is dangerous, collaboration is far more productive and beneficial. Also much of this is China's very own doing, and they do have a "victim complex"..
Not totally unjustified:
https://en.wikipedia.org/wiki/Opium_Wars
I remember reading Peter Frankopan's Silk Roads. When he got to the 20th century he said the Iranians at first welcomed the American's (in order to help them get rid of the British). But they soon realised that the Americans were more British than the British, and not in a good way. :-(
We've put considerable effort into pissing people off, and the worst of it is that we were good at it.
But no worries for the West -- I'm sure the East will see the funny side.
No idea why people repeat CCP propaganda about China being brilliant and will overcome sanctions. It is highly doubtful if their education is such that it generates enough creative and free thinking engineers who are able to drive real innovations instead of resorting to stealing and copycatting that they are doing for decades now. China didn't come up with anything new except cheap production driven by Western machine tooling and the advantages of scale from a 1.3 Billion domestic market. It is right of any government to fence off this parasitic regime, which is a shadow of those in 30's Germany and Russia, and refuse to be bullied by them.
Until the Chinese people become smart enough to rid them selves of the CCP repression and start treating the rest of the world as equals, we should be happy to import a bit less garbage, pay a bit more for things and enjoy the benefits of more people having jobs in our countries.
> No idea why people repeat CCP propaganda about China being brilliant and will overcome sanctions
Perhaps... it's because it's true.
After all, their population is roughly four times larger than the USA. So just by the law of averages, they have four times as many "clever" people as the USA has; even if only half of these get an education equivalent to that available in the USA, then that still gives them double the number of eggheads.
And if we're being honest, the US educational system doesn't have an amazingly positive reputation.
> China didn't come up with anything new except cheap production driven by Western machine tooling and the advantages of scale from a 1.3 Billion domestic market
Oddly, people were saying the same about Japan, some 30-40 years ago; I can remember my dad disparaging Japanese cars as they were "made from recycled steel imported from us, and therefore rust". And my mother can remember when dolls and other toys made in Japan back in the 60s and 70s were viewed as cheap and nasty.
And then they invested in education, retooled their working practices and threw lots at money at high-tech investments. The result was that by the 1980s, they'd pretty much forced the USA out of the previously lucrative memory-chip market, and by the 1990s, Japan was viewed as a serious rival to the USA, to the point of becoming a cyberpunk cliche.
For an added bonus, consider the USA itself. The entire reason it was able to transform itself into an industrial powerhouse was because it liberally stole IP from Europe for things like steam engines and weaving looms.
https://www.history.com/news/industrial-revolution-spies-europe
First you steal. Then you invest. Then you compete at the low end with your "superiors". Then you compete at the high-end. And then you overtake said superiors and become a dominant force.
It's happened before, whether it's the USA vs Europe, or Japan vs the USA. And it'll happen again with China vs USA, whether you like it or not.
There is a period when an industrializing economy makes cheap garbage. Japan and Korea went through that phase. I remember reading an article about 30 years ago when Korea was emerging. A Korean business leader noted that Korea could not continue to manufacture cheap goods but had to at that time transition to making competitive world class goods. There is always someone in the world who has the cheap labor to be on the bottom.
I'm struggling thinking real people would actually believe the CCP is amazing. These threads must be started by torolls. The US, Japan, Korea, are democracies, for a little bit longer hopefully anyway.
People always talk about how smart Chinese people are. Just look at the kids in the schools here in the US. That's because the smart ones finally got fed up and left.
When China was moving towards a more democratic society it was growing by leaps and bounds, and beginning to earn the respect of the west. Of late they are moving back to a more totalitarian regime, which will likely lead to a steep downturn. As Andy Rooney once noted. I'm glad I don't live in Hong Kong, and as he predicted, the CCP just screwed the pooch there.
I'm sure we can figure out a way to blame that on Trump (or the US). After all Trump is responsible for World Hunger, Covid, and the woes of everyone in the world. What a crock of sh*t.
And I might note , in the begiining Japanese cars (for example) were crap. But free markets and innovation...''' ie FREEDOM allowed the businesses to incrementally improve to the quality levels we see now. Same happened in S Korea. Freedom drives innovation, not government. As long as the government is driving the innovation, there won't be much.
Actually we must admit that what CCP is managing to achieve against all this US-led boycot is quite amazing.
What really scares US is the fact that China is the proof that communism can be a viable model instead of being a failure, something you can point your finger at and tell the people "you don't want to be like them, do you ?". You must shudder at the idea that large masses of people in US might question the legitimity of 1% amasing 90% of the total wealth. And that's exactly the question CCP is asking the masses in China, do you really want to be like them ? 1% of Chinese population might cheer at the perspective but at least 1 billion might disagree.
After spending half of my life under a communist, authoritarian regime, I think I know what I'm talking about. Believe me, states are being governed by interests and not by moral principles. Say it ain't so!
What the PRC practices today is hardly "communism", certainly not in any form that Marx, Engels, Trotsky or Lenin would recognise. It is basically state-owned capitalism and it's been very successful; Deng Xiaoping invented it, whatever it's called. The glitch with this particular company will have no long term effect, and Chinese science and engineering will bring their semiconductor supply chain up to scratch within a few years. The US, including Biden, will come to deeply regret the current trade war that they didn't need to start. A big strategic D'Oh!
>> I'm struggling thinking real people would actually believe the CCP is amazing. These threads must be started by torolls. The US, Japan, Korea, are democracies, for a little bit longer hopefully anyway.
Not the case - I'm 40 and from the UK, I've been posting on El Reg for almost 20 years (You can check my history), thats a hell of a long time to be a troll.
The CCCP is not "amazing", neither is China. But then again, it's also not "dastardly evil", it's just different... a different political system, different ethics, different motivators.
In the past 5 years, I've seen the West turn China into the Bogeyman of the 21st century.. It drives me nuts that it doesn't concern others like yourself, I see politicians sleep-walking us back to the 1960-80's and living in a shitty world with another cold war... thanks, but no thanks..
I'd rather voice my opinion and call bullshit where I see it.
Le sigh. The more I read this thread, the more that the phrase "those who refuse to learn about history are doomed to repeat it" comes to mind.
> And I might note , in the begiining Japanese cars (for example) were crap. But free markets and innovation...''' ie FREEDOM allowed the businesses to incrementally improve to the quality levels we see now. Same happened in S Korea. Freedom drives innovation, not government. As long as the government is driving the innovation, there won't be much.
Odd. I'm pretty sure that the US government is/was the sole funding source for NASA, and that's where a great deal of innovations from the last 50 years came from.
And while I don't want to invoke Godwin's law, I'd note that a certain European country was able to produce significant innovations while still being a totalitarion state.
Freedom doesn't necessarily drive innovation. Competition, funding and motivation - however misplaced - does.
Also, in what way is the Chinese government directly "driving innovation"? From what I've seen, they're basically providing funding and then letting the many and varied companies do what they want to do.
(At least, until/unless said companies do something which is considered politically inadvisable. But that still leaves a very large amount of freedom for said companies, especially if they're producing wares for exports)
And finally, I think it'd be hard for anyone to argue that China isn't capable of producing high quality goods, seeing as they're now producing a significant percentage of the world's goods, and have been doing for some time.
Yes, you can still go out and buy cheap chinese-made tat from the local pound or dollar store. Or you can go somewhere else, pay more money and get something that's more robust and reliable... and will also have a "made in china" sticker on it.
Because, as with most things produced in a "free" economy, the quality of what you purchase is (up to a point, especially when it comes to branded/luxury goods) linked to the amount that you're willing to pay.
Well Chinese culture could be a factor. Forced labour is not going to translate to producing innovation and high quality products. The rampant corruption in China is also going to hold them back, however the increasing corruption in Western Democracies is evening that playing field .
I agree that it is an arrogant mistake to think "people in my country are smarter than people in that country". There has always been another less obvious cause for discrepancies.
And the Chinese government is capable of pursing long term strategic goals, whereas most democracies change direction when a new president is elected e.g. the Paris Climate accord and the Iran Nuclear agreement.
China didn't come up with anything new except cheap production driven by Western machine tooling and the advantages of scale from a 1.3 Billion domestic market.
Ah, but here you're wrong. As a matter of fact, some of the things developed by China have the potential to change the balance of power in the world, especially now people start to pay attention to global warming.
You can do China no greater pleasure than to dismiss it.
> No idea why people repeat CCP propaganda about China being brilliant and will overcome sanctions.
First off, there are no "sanctions" on China, you may be confusing them with Iran or Russia, or the fact there are export restrictions to some Chinese "entities". Given 50%+ of the tech in your home is either built in China, or has significant components that are built-in China.. No western government would dare for fear of pissing off their voters, since they can't get the latest and great iPhone.
Second, I take it you've never been to China? Over the past 30 years, they've gone from a third-world back-water, to challenging the US for "biggest economy".. They've effectively done what the USSR could not.. So even if the CCCP are pumping smug "we're frikkin awesome", they may have a point.
Third, you are assuming Chinese citizens want a "western way of life", sure some Chinese want "freedom of expression", but most don't give a shit, what they want is a comfortable life - Which the CCCP has delivered in droves (as mentioned in point #2)... As far as they are concerned, this is a golden-age. So why would they want to over throw?
I agree with the part about steeling and copycatting, but to be honest, thats a problem of western making - China had no concept of "owning an idea". Every company that outsourced to China is part of that problem, they saw an opportunity to improve their margins and offload costs associated with manufacturing. it was extremely shortsighted (hindsight is a wonderful thing) and now our own capacity is minuscule and the West is reliant upon them... But likewise, they are reliant upon us to buy their products....
Welcome to Globalisation!
sure some Chinese want "freedom of expression", but most don't give a shit, what they want is a comfortable life
Exactly. I've heard that in slightly more polite language from successful middle-class PRC citizens. I don't mean to condone human rights abuses in the least, but don't imagine that the mainstream population feels oppressed.
The United States of America rampantly copied European products, designs and technologies after independence, viewing the European system of copyrights and patents as unfairly onerous. It doesn't mean that copying is fine, but this illustrates that perspectives are different.
The sanctions placed on China by the Trump administration will likely be the biggest boost to China that could have ever been possible
The funny thing is that the Americans do not appear to have learned from the last time they tried to pull that one: Russia. While the West was wasting precious CPU cycles to animate cursors and run Clippy on the latest hardware, Russian programmers were forced to do with far less powerful systems - and so learned to be very, very efficient.
They truly have no idea of long term consequences.
The problem remains. What, exactly, was or is the terrible thing the west has to deal with because Russian programmers are good? The hacking? No, that can't be it. Any country that puts a lot of effort into getting hacking capabilities can get there. North Korea has had almost no history of computer education and used to have really bad malware, but they're now quite good at it because they invested. Maybe Russia is so good at coding that they'll dominate us economically. They don't. What's the terrible consequence hanging over us?
The only result of this vaunted Russian efficiency that I can see is that there are Russian programmers who are good at their jobs, whether in Russia or out of it. I know several Russian programmers who are usually pretty good, but I also know programmers who are pretty good and came from countries on all inhabited continents. Also, there are some programs written by Russians which are nice. Nginx and 7zip come immediately to mind, and there are certainly more. That's if anything a benefit to us given how probably a bunch of us use those. As an argument, it doesn't make much of a point in support of anything else.
Around 250 years ago a group who met regularly over coffee in a London coffee house recognised that patents were stifling progress. One of the drivers to meet had been the Royal Society's focus on science and philosophy, with research and knowledge being ends in themselves. They saw this as waste and formed the Society for the Encouragement of Arts, Manufactures and Commerce. One of their first initiatives all those years ago was to raise money to award prizes for innovation that was then shared - to provide an incentive to not patent. The Society was one of the forces behind the Great Exhibition in 1851. They also encouraged wider education and established one of the first exam boards in the UK. They're still going, having added "Royal" to their name at the turn of the last century, and became the RSA - still supporting innovation and social change.
Aided by the West's short term strategies where the next shareholder dividend of board bonus is more important that what is happening in 5 years time. Add to that the consumer driven society where the only thing that matters is the lowest possible cost, regardless of how it is achieved and you end up here.
We have ruthlessly moved huge amounts of production to China and other Far Eastern countries in the quest for ever cheaper prices. If we had not moved every piece high-tech manufacturing we did to China there would not have been the easy access to the information. What we didn't move we sold for a pittance to foreign investors who promptly did the same.
We are now paying the price for this stupidity. There are huge cultural differences, they think long term and as you say they are smart, very smart. There is no rule that dictates that the only smart researchers technical bods and scientists are in the west.
How did they go bankrupt?
Two ways, gradually, then suddenly.
(Thanks, Hemingway)
It might just be that fundamental problems became apparent after the government took over. Replace the bullish COE with a technocrat and "We can do it, just give me another $5 bn and two more months" might morph into: "What were they thinking (smoking)?"
As with more high tech companies in China, they were struggling to find, and retain, qualified personnel. It's not uncommon to lose 10 to 20% of your workforce after Chinese new year, when half the country goes to visit families in the remote regions, only to return to the factory-cities, and end up in day long traffic jams or at a station waiting on a train for days. Fearing loss of face with their employer, they then just don't show up anymore. It's one thing to train some peasant a few tasks on a production line at Foxconn, but for this kind of work, you need seriously qualified operators and maintenance personnel.
they were struggling to find, and retain, qualified personnel
That is not actually correct. Low-level staff versus someone with technical skills are two different kettle of fish.
China has been aggressively (and successfully) poaching Chinese nationals working overseas. And they are returning to the mainland in droves along with highly-valuable documents and blueprints. (Yeah, I'm gonna get downvoted for this comment.)
China has been, in the last 2 years, been auditing large- to very large Chinese companies to make sure they are will not "take everyone down" when they fail. Real estate, construction, aviation and finance sector are very much under the microscope. No one is exempted.
HNA Group’s Bankruptcy Isn’t Over. What Comes Next for the Chinese Conglomerate
This company failing has nothing to do with "attracting talent": If, according to El Reg, the company has had difficulties with "construction contractors" then the collapse is, most like to be, money.
Is this a side-effect of the demand for semiconductor equipment? As the article notes, sales of second-hand kit to China from Japan are booming. According to the article, Wuhan Hongxin got hold of some kit capable of 7nm resolution work (rare, and expensive), but it's been idle in a non-working factory since at least August. Now it's gone bust, a company (e.g. SMIC) with working (but worse-resolution) fabs can buy the kit and try to get a 7nm process up and going. So it would be a drive-your-competitor-bust-and-buy-the-factory approach (all very capitalist) rather than some evil communist plot.
Developing good processes to make semiconductors is hard. Doing it from scratch without a previous generation to build on is harder. Doing it without the right infrastructure (cleanrooms, stable aircon etc.) is impossible.
"According to the article, Wuhan Hongxin got hold of some kit capable of 7nm resolution work"
I suspect "kit cable of 7nm work" is eaither a very low volume test system or it is 7nm for RAM but lacks the complexity needs for more complex chip making.
The lithography equipment used by Intel/Samsung/TSMC tends to run in the order of $250-300m/unit, requires a lot of high quality chemicals to operate successfully and requires frequent maintenance when operating at capacity - if one of those links is missing, potential production may have been very limited.
And as you say, that ignores the challenges around building infrastructure (doable based on existing fabs in China), expertise (possible as ex-Intel/TSMC people return to China) and chemicals (significantly harder - Japan and the US seem to be the only ones producing the necessary quality at present)
>The lithography equipment used by Intel/Samsung/TSMC tends to run in the order of $250-300m/unit,
It is also developed alongside the customer and so requires a decades long relationship.
You can't just order a 7nm plant from ASML's website for immediate delivery
> chemicals (significantly harder - Japan and the US seem to be the only ones producing the necessary quality at present)
Really? When it appeared that China might be hit harder, everyone was explaining how specialized biological reagents tended to be sourced in China, so if they needed a lot, testing in the US might become problematic
Biological chemicals and chemicals used in semiconductor manufacturing are very different. I'll admit now that I know little about either, but it's not surprising that China, which has a large pharmaceutical industry, has a better supply chain for biological chemicals than they do for those needed for semiconductors, since they don't have such a thriving industry in that. Japan and the U.S. both do have a long history of making semiconductors, and the other countries that make a lot of them are Taiwan and South Korea who both have pretty good relations with those countries.
"Really? When it appeared that China might be hit harder, everyone was explaining how specialized biological reagents tended to be sourced in China, so if they needed a lot, testing in the US might become problematic"
Different markets - you are looking at high volume chemicals for health testing while this is very high purity as the impurities tend to lead to high failure rates in wafer manufacturing.
Think four 9's or greater as well as storage/transport processes for those chemicals.
It's not something China can't do at some point but it isn't something they can do at the moment based on TSMC/Samsung being largely reliant on Japanese suppliers and Intel on US suppliers.
I suspect it was a combination of over-promising and under delivering with the possibility of a little corruption and fraud.
Getting equipment for low capacity development (i.e. a few thousand wafers per month - maybe a million usable chips is its an ARM SoC or similar) but scaling that up to a 20 billion facilitywould be extremely challenging without ASML providing the lithography equipment. Note that there aren't any alternative manufacturers in the 14nm and below space and its not just about intellectual property - the equipment to make the very expensive lithography equipment is also expensive and has resulted in competitors pulling out and TSMC/Samsung/intel having to invest significant amounts into ASML.
At best, outside of small scale labs, they would need second hand equipment and that isn't as readily available as hoped with high demand for TSMCs leading edge and leaving a lot of production on older fabs.
They claim funding was withheld but I suspect that was to avoid an even more embarrassing failure.
Military motivated? I presume you are not well informed of the power structure of this world. That the west is spending ten times as much money on weapons than the rest of the world combined; However it would not make you believe anything else anyways as this is not about factual argument but ideology.
It’s simply sad to see a land of more than a billion people getting oppressed by the west with sanctions and being unable to work it out.
Whatever.
--> It’s simply sad to see a land of more than a billion people getting oppressed by the west with sanctions and being unable to work it out.
The sanctions are against the CCP, their genocides, and their constant and various violations of their own peoples rights, NOT the people of China.
"not well informed" something of pot and kettle. Military spend like anything else should be considered relative to GDP. By this measure the biggest spenders are the Middle East and Russia.
Any nation that normalises theft and slave labour should expect some kind of unpleasant response from the global community.
https://data.worldbank.org/indicator/MS.MIL.XPND.GD.ZS?most_recent_value_desc=true
"Any nation that normalises theft and slave labour should expect some kind of unpleasant response from the global community."
Excerpts below from
https://en.wikipedia.org/wiki/Penal_labor_in_the_United_States
Penal labor in the United States is explicitly allowed by the 13th Amendment of the U.S. Constitution
Penal labor is economically important due to it being a source of cheap labor, with base pay being as low as 60 cents per day in Colorado.
A wide variety of companies such as Whole Foods, McDonald's, Target, IBM, Texas Instruments, Boeing, Nordstrom, Intel, Wal-Mart, Victoria's Secret, Aramark, AT&T, BP, Starbucks, Microsoft, Nike, Honda, Macy's and Sprint and many more actively participated in prison in-sourcing throughout the 1990s and 2000s.
All U.S. state prison systems and the federal system have some form of penal labor, although inmates are paid for their labor in most states (usually amounting to less than $1 per hour). As of 2017, Arkansas, Georgia, and Texas did not pay inmates for any work whether inside the prison (such as custodial work and food services) or in state-owned businesses. Additionally, Alabama, Florida, Mississippi, Oklahoma, and South Carolina allowed unpaid labor for at least some jobs.
The Prison-Industries Act allowed third-party companies to buy prison manufactured goods from prison factories and sell the products locally or ship them across state lines. Through the program PIECP, there were "thirty jurisdictions with active [PIE] operations." in states such as Arizona, Arkansas, California, Colorado, Florida, Georgia, Hawaii, Idaho, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Minnesota, and twelve others.
Executive Director of the Alliance for American Manufacturing, Scott Paul stated that "It's bad enough that our companies have to compete with exploited and forced labor in China. They shouldn't have to compete against prison labor here at home...."
>Penal labor is economically important
Penal labor is economic suicide, you have a worker paid 60c/hour but you have to have a guard paid $50/hour watching them and since you know that they are going to do all they can to sabotage the work you need to have 2 QA inspectors paid $80/hour checking the product.
Ask that Von Braun chap how well it worked out on the V2.
Amazingly the US had military helmets made by prison labor, in combat they found that there were "fatal manufacturing flaws", even the Nazis had the sense not to have camp inmates pack parachutes.
Respectfully, you are ten years out of date.
And, El Reg - flagship?? You have got to be joking!!
This was a local private enterprise instigated by the Chinese equivalent of golf buddies/ lodge members etc who persuaded the city government to allot them a piece of land with promises of big bucks and national kudos. The promoters may conceivably have wanted to succeed - I mean, 7 is half of 14, how hard can it be? - but will have been more interested in getting Government subvention because as long as the money flows we can pay ourselves a juicy salary and bonuses.
The fact that a project descends so soon into recriminations amongst builders and others means it was woefully underfunded in the first place.
Furthermore and most important China is now run by an army of very smart, astute and educated bureaucrats - mainly in Beijing but also other tier 1 cities (Wuhan excluded) and they would have taken one look at the business plan and progress and pulled the plug on allocation of Central Government funding before there was a even a plug.
The more a country is pushed by others in the way that we are doing with trade sanctions the greater the risk that at some point a hardline/extreme view starts to evolve. Now with the likes of Iran, Iraq etc the underlying issue was oil. With the main protagonist now approaching self-sufficiency in oil (or able to get from elsewhere) that hellhole has largely been ignored.
China is very different as the circumstances have changed. They are a cash-rich country and have both bought US debt heavily and invested in significant infrastructure projects pretty much everywhere except for a few Northern European countries and the US. That leads to the situation where the country on the receiving end of the sanctions is in a very powerful position. They are also very powerful militarily and have already demonstrated that they are not intimidated by the West (South China Sea islands).
If the wheels do fall off and China starts a economic war by dumping US debt what exactly can we do?
There is only so much money you can print and crucially now things can happen very fast. That puts the hard line anti-Chinese voices in a very strong position to start military action. All the technical superiority available cannot provide an assured "win" in those circumstances. That leads to some extremely dangerous options being considered with nuclear (and whatever else people have under the bed) becoming available. I am not an expert but I just cannot see how any military exchange between the West (US with others dragged in) and China can end with anything other than total catastrophe for both sides.
That puts us perfectly in the Bond "Tomorrow Never Dies" scenario.
A long-winded bit off waffle whilst having lunch........
China does not "hold US Debt". Rather it has a lot of US Dollars in interest-bearing accounts in the United States, called "Treasuries". The only thing it can do with that money is spend it in the United States. If it decides to withdraw that money from those accounts, then it would have a lot of USD sitting in NON-interest bearing accounts, and why would it do that? As economist Warren Mosler put it, "All we owe China is a bank statement."
The US Federal Government never borrows money. It doesn't need to.
"The US Federal Government never borrows money. It doesn't need to."
It borrows money by issuing bonds.
If the "treasuries" you're referring to in you post are Treasury-Bonds then it means that the US Fed is borrowing money from China, and paying them decent interest for the next 10 to 20 years.
This is mostly incorrect.
"China does not "hold US Debt". Rather it has a lot of US Dollars in interest-bearing accounts in the United States, called "Treasuries"."
Treasuries are bonds issued by the U.S. government, specifically the federal reserve, in order to borrow money to pay for government spending. That is otherwise known as debt. Also, it's not U.S. accounts, it's accounts anywhere, mostly China, holding U.S.-issued bonds.
"The only thing it can do with that money is spend it in the United States."
That's wrong on a few levels. First, it's not money in there, it's bonds. Eventually, the bonds mature and they have money they need to reinvest, but the accounts concerned contain bonds that haven't matured. So they can't spend it because it's not money. What they can do is sell them.
"If it decides to withdraw that money from those accounts, then it would have a lot of USD sitting in NON-interest bearing accounts, and why would it do that?"
As stated, it would "withdraw money" by selling the bonds it currently has and also stop buying new ones. It doesn't do that now because U.S. bonds are generally seen as safe and it wants money more than it wants to annoy the U.S. If it did, the bonds would sell at their face value at least, meaning that China would get the interest they already earned and also push up the supply of U.S. debt on the market. Supply goes up, the price goes down, so now the U.S. has to pay a higher interest rate on new debt they issue. That might not be a problem if other countries and investors see U.S. debt as still safe, but if they don't, then it could be a bigger problem. Investors do that all the time. They decide they want to invest in something that will pay better than their bonds, so they sell their bonds. China might even do that without wanting to hurt the U.S. if they decide there's a better place to invest the money.
"As economist Warren Mosler put it, 'All we owe China is a bank statement.'"
And he's correct, but it's not the kind of bank statement which can be erased quickly if the U.S. decides to delete China's money. It's not a killswitch on the American economy, but it is something they can manipulate for leverage if they want to.
"The US Federal Government never borrows money. It doesn't need to."
They don't need to, but they do borrow. They have the systems to make as much money out of thin air as they want, but they don't use them to simply increase their account balance when they want to spend more money than they have. They issue bonds, paying interest to people who lend them money now, in order not to print as much new money. I don't understand how you're missing the point that, when they accept money now and promise to return it with interest later, they're borrowing money.
Website images of what it should look like:
https://www.fonow.com/Images/2020/0828/44f199bc-bd98-4cea-b2fb-8b07c0d0a799.png
Real life images of what it currently looks like:
https://www.fonow.com/Images/2020/0828/9d6c3e28-999d-4562-a05f-c804478bdfc6.png
https://cdn.wccftech.com/wp-content/uploads/2020/09/HSMC-Wuhan-Fab-Construction.jpg
https://i2.wp.com/static01-proxy.hket.com/res/v3/image/content/2825000/2828812/A_1024_1024.jpg
https://i2.wp.com/static01-proxy.hket.com/res/v3/image/content/2825000/2828812/B_1024_1024.jpg
https://i0.wp.com/static01-proxy.hket.com/res/v3/image/content/2825000/2828812/C_1024_1024.jpg
https://i2.wp.com/static01-proxy.hket.com/res/v3/image/content/2825000/2828812/E_1024_1024.jpg
https://img.caixin.com/2020-03-18/1584519584063649.jpg
I suspect pulling the plug on roughly 128 billion yuan (€16.4 billion / £14.2 billion / $19.8 billion) of investment and subsidies, may have been a good decision.
Where have I hear that before? We will retreat up market and this will protect our profits, even if the sales volume is lower.....
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[UK] The UK motorcycle manufacturers in the early 1960s! (Triumph, Norton, BSA....then Honda and Kawasaki)
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[UK] The UK car manufacturers in the 1970s! (Austin, Morris, Rover, Jaguar....then Honda...then VW and BMW and Nissan)
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[US] IBM manufacturing PCs before 1987! (PS/2.......then an endless list of clones....and Apple)
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[US] The 5G equipment manufacturers in the 2010s! (Watch this space. Cisco and others need to make sure that they have plans against external attack.)
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The Western countries race to the bottom on cost over the past thirty years has:
a) Provided the Chinese with HUGE design and manufacturing expertise. (Just look at Apple - manufacturing in China, profits in the US....but for how long?)
b) Hollowed out local Western design and manufacturing expertise. (And as a side effect, hollowed out Western academia.)
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If anyone thinks that the failure of a single Chinese technology investment is going to make any difference at all.....just take a look at the sample of Western assumptions that the <upstart_name_here> can never get to "high end" products!!!
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