Next up: China versus Taiwan?
With the election of Joe Biden it seems that the time has arrived for all tyrannies to try to accomplish what they’d been putting off for just the right moment.
And so we have the looming specter of China actually doing something about its long-held dream to take over Taiwan:
Mainland China has been preparing for this attack for generations; and the Republic of China has been preparing to defend itself for just as long. On top of that, most analysts anticipate that Japan and other Pacific seaboard allies will rush to Taiwan’s aid immediately as well, not to mention the United States. Unlike the (so far) narrow Russia-Ukraine conflict, a rapidly expanding arena is likely.
If, Heaven forbid, this dark day comes, the bombed-out cities, factories, and cargo terminals on your television screen will be the ones that produced and shipped your television, the ones that produced the tires on your car, the ones that produced the appliances in your kitchen and the furniture in your living room.
This war will therefore have a much greater effect on North America, and in particular, on our economy….
As a result, the United States (and too many other Western nations as well) became incredibly dependent on China, Taiwan, and the many other “low-cost countries” of Asia, for everything from small parts to finished goods, from luxuries to necessities.
Not satisfied to buy “the low-end lines” from Asia while making “the high-end lines” here, we integrated our economies through “strategic vendor partnerships” (how often have you heard that phrase at company meetings?).
American businesses select a respected Chinese vendor and give him our tooling, our plans, our designs. From this partner, we buy not only the finished goods we resell, but also the custom components that we need to make our “USA-made” products too…
One of the reasons that China isn’t as afraid of American action if they attack Taiwan is that they have thousands of American-owned (well, to the extent you can own something in a communist country… but we think of them as American-owned, anyway) manufacturing plants and distribution centers, full of our machinery and assembly lines, our injection molds and stamping dies, all up and down the coast of China.
That certainly was a great idea. What could possibly go wrong?
If Trump had had a second term, he might have had a chance to further tackle the problem – a problem of which he was well aware. But he didn’t have that extra time. And Biden not only has no interest in doing so, he arguably has an interest in the exact opposite.
It’s been claimed that Lenin said “The Capitalists will sell us the rope with which we will hang them.” Whether that’s a bona fide quote of his or not, it’s a great quote and no less true now, a century later.
We can criticize Europe all we want for having become dependent on Russian fossil fuels. But we’ve arguably done worse regarding the intertwining of our economy with China’s.
I have to say I never understood the argument for doing it, even back when I voted as a liberal Democrat. Oh, I understood it in the sense that I realized it seemed cost-effective and gave us access to cheaper goods. But I didn’t think it made any sense long-term. I also realized that one of the theories was that as China became more capitalist itself it would become a liberal democracy with more Western values. But that seemed a surface mirage, and meanwhile the dependency was worrisome. It has become more so.
The author advises readers that there’s no time like the present for businesses to start undoing this state of affairs. But I don’t think it will happen, because the incentives and leadership aren’t there. A war would change that, of course, but there would be a lot of suffering in the meantime.
Indeed. Ninety percent of the high level computer chips made in the world are made in Taiwan.
A war between China and Taiwan is basically an end to technology advance for, maybe, a decade.
Yeah, imagine trying to seriously sanction and boycott China at this point in any meaningful way. Imagine all of our current crop of sanctimonious oligopolists (Disney, Nike, Apple ect.) who were so quick to gleefully jump on the “Ban all the things that have anything whatsoever to do with Russia!!!” bandwagon… do you imagine they would be willing to do the same if China decided to take Taiwan?
deadrody:
Do you know the history of how that came to be – that it was so centralized in one place? Did anyone warn that this could be a problem, or are people only awakening to it now?
Yup, outsource to China, and soon they will be selling your technology at reduced prices under their own label. So many mangers are short-term thinkers.
As Neo proposed yesterday, China may as well play the nuclear blackmail card as it takes over Taiwan. We are in very dark and dangerous waters. I just hope I don’t end up as a shadow on some concrete wall.
A little OT, but
I have to say, we’re 15 months in and so far the Biden presidency has far exceeded my expectations in the worst way.
I mean, I knew the Biden presidency would be bad. I knew he was corrupt, venal, incompetent, and likely demented. I understood that having such an obviously weak president could be extremely dangerous, perhaps emboldening the most dangerous and invidious minded world class tyrants. But man… things have gotten really, really bad.
On pretty much every metric worth naming things have gotten dramatically worse since Biden took office. Inflation, illegal immigration, general deep state oppression… and now we’re talking about the very real possibility of China invading Taiwan? And of nuclear f&*#ing war?!!
If there’s any sanity left in our Republic, if there’s any justice at all, the Democrat party should not only lose both houses in November, but lose them by significant margins, and lose the Presidency in 2024, and not regain any majorities or the Presidency for at least a dozen years. And the NYT, WaPo, CNN and the rest of the mainstream media should be driven out of business. But of course this is all just wishful thinking. We’re living in hell apparently.
Nonapod:
I sometimes think about all the people who say the parties are peas in a pod and it doesn’t matter who we elect.
It does matter, as the Biden administration has proven. The speed of the decline has been extraordinary.
Nonapod, you are making a large assumption we will make it to the November election, yet alone 2024. In my daily life I have to keep doing things like making plans for a visit with my daughters, and we keep working towards building our new house, etc. But in the back of my mind I have that nagging thought that the world is just going to f*cking blow up very soon. As you and Neo say, I see it all due to the election of “Biden”.
There’s a lot to doing business in China.
First is corruption. Unless you pay off the right people you will not get things you ordered and you will not be paid for things you delivered.
Second is the supply chain between here and there, it all has to work right and it all has be on schedule in order for you to be able to run your business depending on it.
Leave aside Taiwan and war for a minute…
Does any of that tell you how much cheaper it is, that you can spend money on bribes and shipping across the ocean and still have it be more profitable?
COVID and war will probably change all that. But if it’s not China it will be somewhere else. I’m old enough to remember when we all thought that Japan was going to put us all out of work and then it was Mexico and NAFTA. It’s been China for the last 20 years or so but soon it will be someone else.
deadrody and neo:
Both Intel and TSMC are aggressively expanding. Intel plans new facilities in Arizona and Ohio.
https://www.intel.com/content/www/us/en/newsroom/news/intel-breaks-ground-two-new-leading-edge-chip-factories-arizona.html#gs.tv1z9a
https://www.theverge.com/2022/1/21/22894612/intel-ohio-chip-plant-20-billion-processor-shortage
TSMC is doing new facilities outside Taiwan in Arizona and Japan.
https://asia.nikkei.com/Business/Tech/Semiconductors/Construction-of-TSMC-s-U.S.-chip-plant-delayed-by-labor-crunch-COVID
These will not be done in time if the Chinese decide to move on Taiwan this year but provide the 3-5 year time horizon with significant advanced chip fab capacity outside Taiwan.
In my mind the Chinese decision to invade Taiwan hinges on one question. Does Taiwan have nuclear weapons and if so, will they use them? I personally believe that Taiwan, Japan and South Korea are all a ‘quarter turn of a wrench’ from being nuclear powers. I believe they don’t technically violate the Nuclear Non Proliferation Treaty but are at most hours of work from being nuclear powers. This is not an issue the Russians faced with Ukraine.
One worry about news of the new fab construction stateside is that those manufacturers have concluded that they will need those fabs because the ones in Taiwan will be unavailable and are sure enough of that to bet billions of dollars
Not a thought original to me, and there are of course other reasons a corporation might want to build stateside facilities.
IIRC from my East Asian History course over 5 decades ago ….
Chinese history when a new Dynasty took over the mainland had the losing side retreat to Formosa … uh … Taiwan. Then, after some appropriate period of time, the two sides would peacefully “kiss and make up” to be one country again.
It seems highly unlikely that such a reconciliation will take place this time.
I wonder what would happen if “The Republic of China”/Taiwan/Formosa declared Independence from the mainland?
Instead of maintaining the fiction that “someday soon” it will force the Communists from power and retake the mainland.
Historically it’s an interesting situation.
@Tuvea:when a new Dynasty took over the mainland had the losing side retreat to Formosa
Not really. Chinese people didn’t really start going there until about 1300, and then the Dutch settled it in 1623 they found only about 1500 Chinese there, mostly fishermen and/or pirates. A Ming dynasty loyalist warlord took it from the Dutch, but then twenty years later the Qing dynasty took it over forcibly and integrated it into China. They lost it to Japan in 1895, so the 6-year-old Emperor could not retreat to it, and there has been no dynasty since.
Losing dynasties did typically retreat somewhere and set up some kind of successor state which got forcibly reabsorbed into China later, but not to Taiwan until 1945.
Tuvea:
I’m sure that that was part of the calculation for TSMC. The other point I would note is that both TSMC and Intel under invested in capacity for most of the last decade. as did most of the semiconductor industry (Intel also under invested in process development as well but that is another story). Even if nothing happens to Taiwan, all of these new facilities will be running at full capacity by 2026 or so.
“I have to say I never understood the argument for doing it, even back when I voted as a liberal Democrat. Oh, I understood it in the sense that I realized it seemed cost-effective and gave us access to cheaper goods.”
I think the original business excitement about China was more about *expanded markets* than it was about *cheaper goods*. (“If we can sell our product to just 1% of the Chinese population, then the impact on our revenue will be…”) It was only a bit later that it became clear how much manufacturing capability was developing in China.
There are still a lot of people, including some very intelligent ones, who believe that American middle-class prosperity rests on imports from China and other low-labor-cost countries. See my response to this line of thinking here…Even Smart People Get it Wrong Sometimes:
https://chicagoboyz.net/archives/58984.html
… I never understood the argument for doing it, …
Neo, I agree with your “one of the theories” as being a correct assessment of the situation and a weak idea.
The other factor was the tension between the Soviets and the PRC. Back in the 80’s the Soviets were the big threat and we saw an emergent China as a counterweight to that threat. There wasn’t a ton of US commerce going on in China in the 80’s, but it had definitely started.
Later in the 1980s, after the United States and China formally established diplomatic relations, trade with China began to take off. “The phone was ringing off the hook,” says Scott Seligman, USCBC’s Beijing representative from 1980 to 1982. “Everybody was interested in doing business in China.”
There’s a few other interesting points in that link. My take, in hindsight, is that it was crazy for the US to continue and accelerate the commerce and integration in China after the Soviet collapse and Tiananmen Square.
One point that is easy to forget is that people like the crack analysts in the CIA were telling our political policy makers that the Soviets were an almost unstoppable super power both militarily and economically, right up until it all collapsed.
why are there double standards regarding ukraine and taiwan? if russia is evil for invading a country that it has no sovereignty over, why does america support taiwan when this time it is the losing side of the chinese civil war 70 years ago illegally occupying a chinese province? China reclaiming taiwan is as legitmate as Ukraine reclaiming lands illegally taken by russia. which side is good and bad depends entirely on american’s interest but not principles.
david foster,
I can verify that market penetration was the major impetus for at least one U.S. corporation. I was doing work in Asia in the early ’90s and those were the discussions we were having at the corporation where I worked. Among our products were veterinary medicines and various fertilizers and we had those exact conversations; “If we capture just 1% of the Chinese market it would double our revenues on such and such a product.”
Not only that, but the fact that the country is so vast and at the time was so behind in so many areas we forecasted we could revitalize revenue on products that had waned in sales in our other markets due to more modern alternatives.
“If Trump had had a second term”
That was put to rest. The thought that Dems would lose Congress may well be put to rest as well in all the confusion. Let’s see.
“why does america support taiwan when this time it is the losing side of the chinese civil war”
And how about Tibet.
dave; JimNorCal:
I’ve written about this before at some length, but I’ll repeat it now.
There are various ways in which countries can lose land. One is losing a war. Another is the breakup and dissolution of an empire (sometimes the land is partitioned and sometimes there’s a treaty). Another is by mutual agreement.
Once a country has lost land that way it loses claim to it. It can gain it back through one of those methods as well. Right now Russia – which lost Ukraine several times in the past for several different reasons, but most recently lost it when the USSR disintegrated and lost its empire 30 years ago – is trying to gain it back by an aggressive war against the will of the Ukrainians. That means that most Americans are going to be siding with the Ukrainians.
Taiwan has a complex history in which it went from a Dutch colony (1600s) to part of China, to becoming part of the Japanese empire at the end of the 19th Century as a result of a war between China and Japan. Taiwan remained part of Japan through World War II, with the Taiwanese fighting for Japan. During the war, China wanted to reclaim Taiwan, and for a while the US seemed to agree, but the treaty was never ratified and never signed and was non-binding, and then after the war it was for several years unclear which country had sovereignty over Taiwan. In fact, no one seemed to have sovereignty over it in the legal sense. Meanwhile, the Japanese population on Taiwan, which was considerable, was repatriated to Japan by the Chinese military. Between the 1930s and 1940s there was also a civil war in China, which the Communists finally won in 1949 and many millions of Chinese fled to Taiwan as a haven:
“dave’s” summary version of Taiwan’s history is incorrect. China has no legal claim to the place and of course it knows that any attempt to annex it requires a war. There is no contradiction between supporting Ukraine against Russia and supporting Taiwan against China, which would be trying to take it over against the will of the Taiwanese people.
I’ll be surprised if the Chinese don’t take Taiwan in the next few years. Nor do I think that Biden or anyone else is going to come to the aid of Taiwan.
Nor can we put economic pressure on them for the reasons cited.
All that said, China’s economic prowess has an end date. In a few decades at most, AI, Robotics and 3D Printing will do to cheap Chinese labor what that cheap labor did to American manufacturing labor.
Though that will be a two edged sword, what do you do with a couple of billion unemployed laborers?
Do not forget how much influence Walmart had on China’s industrial growth. While Sam Walton was alive, Walmart spent money developing American manufacturing, teaching efficiency and such. When Sam died, that stopped and it became Walmart teaching American companies how to move production to China.
Do not forget how much the EPA and state environmental agencies did to kill American manufacturing. California, for instance, has pretty much driven any company that uses a solvent out of state, due to the South Coast Air Quality Management District. And China will not give you any problems at all.
The Marvin window company has made great windows in northern MInnesota since the end of WW II. But a forklift operator made a mistake and dumped a solvent in the wrong place. It was not deliberate, just inadequate training, and the company reported it right away. But the Minnesota Pollution Control Agency, pushed by then Attorney General Skip Humphrey (Hubert’s son) went after Marvin with such a vengeance for that small mistake that Marvin has not built any new facilities in Minnesota since. They build across the border in North Dakota.
And if you’re an American manufacturer and you’re looking at how Biden et al have crippled the US petroleum industry–effectively, they can’t borrow money right now–why would you build here, if you had options?
It’s a little worse than dave says in one way. The government of Taiwan claims not only Taiwan, not only mainland China including Tibet, but Mongolia as well up until 2012 AND parts of Russia to boot, and we do nonetheless support Taiwan’s independence.
However, the US would never get behind helping Taiwan conquer any of those places.
In addition our support for Taiwan is very carefully measured.
The US did nothing when Taiwan was deposed from the Security Council and kicked out of the UN and Communist China was installed in its place.
And when George W. Bush said “Republic of Taiwan” at one point back in 2002 Hu Jintao was on the phone wanting to know what “Republic of Taiwan” meant, and President Bush clarified that all he meant to say was that there is only one China and Taiwan is part of China.
In the Olympics they only get to compete as “Chinese Taipei”, which the Taiwanese read as “Ethnically Chinese Taipei” and the Chinese read as “Taipei which is part of China”.
Frederick:
The likelihood of Taiwan invading those places is just about zero, whereas the likelihood of China invading Taiwan is rather high.
The Taiwan inhabitants have been preparing to defend the island for a long time. I think they realize they might be doing this more or less alone.
@neo:The likelihood of Taiwan invading those places is just about zero
Today, it most certainly is. And in 1992 the probability of Russia invading Ukraine looked rather low too.
I wish we were a serious country that could make commitments and mean them, or else be judicious about commitments we take on. As it is, if Putin is a would-be conqueror without a high-functioning military, we’re the perfect counterfoil in having a high-functioning and expensive military which we never actually use when it would really be important.
Yeah. Taiwan launching an amphibious operation to conquer mainland China. Sorry, but I don’t think Xi looses any sleep about that potentiality.
Ukraine and Tiawan? Just a little bit different, and totally unexpected too: Georgia, Crimea, Donbas, and now the whole pirozhki.
Completely unexpected!
One factor that has driven offshoring is the negative attitude toward manufacturing that has been visible among so many American ‘authorities’ and ‘experts.’ I wrote about the history of this trend and some of the factors behind it back in 2010: Faux Manufacturing Nostalgia
https://chicagoboyz.net/archives/11680.html
When Mao and Chiang Kai-shek went to war they were fighting for the control of china in a winner takes all fashion. when Chiang lost then everything that used to be under his control became Mao’s, it couldn’t be anymore simple than that. If taiwan was not part of china at the time of 1949, then what was the justification for Chiang to establish a regime there? the people’s republic of china is recognized by most countries on earth as the heir of the entities that used to be in control of china be it the ching dynasty or republic of china, GB never argued hong kong was not part of china by claiming that the lease was obtained from the ching government, not the people’s republic of china. arguing with the technicality is a waste of time since Chiang lost the war and everything that used to be under his control became Mao’s, that is the consensus of the chinese people. they claim the war is not over so taiwan’s constitution still claims mainland china belongs to the republic of china the regime that currently occupies taiwan, it doesn’t matter, chiang lost the war so he had no right to seize a part of the country he lost and built a regime there. whether it is fair for taiwanese people who had been living separately under a different system of government is another matter. as Hong Konger who hates CCP i am all for taiwan gaining independent, but at heart most chinese do believe China has very legit claim to the sovereignty of taiwan if they don’t get blinded by their hatred for the CCP.
If taiwan was not part of china at the time of 1949, then what was the justification for Chiang to establish a regime there?
The population was largely ethnic Chinese, as it is in Singapore. It had been held by Japan from 1895 to 1945. It has been under the authority of the Mainland for just four of the last 127 years.
I’m not sure what it’s called when someone invents a ridiculous statement, attributes it to you, and then refutes it. If it’s not already named, I’d like to call this the Chewbacca Offense.
It’s like a straw man argument except it isn’t even a caricature of what you said. It’s made up out of whole cloth. It’s not the “hollow man” argument because in the “hollow man” the person holding the invented position is also invented. In this case it’s an invented position attributed to a real person.
I’ve been seeing it around a lot more lately and I’m sure someone will soon give it a name if it hasn’t one already.
Because 1992 is a serious Ewok place to start a discussion when talking about current events.
May the farce be with you, Jeddi.
China vs Siberia? Vlad really chose badly.
https://www.strategypage.com/on_point/20220315225612.aspx
I figure the main thing protecting Taiwan from China is how hard amphibious invasions actually are. Maybe things are different now and it’s easier but I wouldn’t bet that way.
@ Neo > “The speed of the decline has been extraordinary.”
Like the USSR, Venezuela, and other countries, falling apart happens gradually, then suddenly.
However, there are people in America who are fighting back, with those examples before them, and I’m not sure that was the case in the examples.
Paying off the Bidens was the cheapest payoff in history for the return they are getting.
I knew from day 1 if Sundowner was installed Taiwan and Israel were screwed.
On the twinning of our economies, the US with China, and Neo’s perplexity, “I never understood the argument for doing it….” This is a key hinge-point in the history of our times and the fate of US hegemony in the new century ahead.
1973 — Nixon opens trade with Red China after 25 years of isolation
1978 — Mao Ze Dong dies.
1978 to 1995 Deng Xao Ping reverses Chairman Mao, and declares “It is Glorious to get rich…” This ringing endorsement of capitalism seemed to encapsulate the radical change for China; in fact, this simplified a kore nuanced declaration (briefly disambiguated here https://www.newyorker.com/news/evan-osnos/to-get-rich-is-glorious).
Around this time in the summer of 1995, I met investor Jim Rogers at a magazine editor’s conference in Seattle. Rogers achieved eminence after the 1970s. He co-founded Quantum Fund in 1973 with George Soros, and it grew 4200% until he left 10 years later to teach and travel
With his new book on his around-the-world adventure called “Investment Biker,” we got his presentation: “All my life, from my history courses at Yale to my work at Oxford and later on Wall Street, I’ve studied geography, politics, economics, and history intensely, believing they are interrelated, and I’ve used what I’ve learned to invest in world markets. I was on the lookout for investment opportunities, for some country—and its investment market—about to take off, where I could jump in and make five, ten, fifteen times what I put in.”
https://fee.org/articles/investment-biker/
Roger’s lesson was that the the coming decade would produce an epic commodities boom, engineered by China’s consumption of raw materials to sustain her massive new economic production. Whatever you do, bet on China.
As others mention, Western greed fuelled much of the enthusiastic hope for China’s future. Politicians facilitated this process and took their cut along the way.
Access to open markets and untapped consumers meant prospect for economic growth were great, indeed. That, plus China’s globally biggest population and a renown work ethic told us China will succeed, and that earlier investors will win BIGLY.
Furthermore, the US experience in Japan proved the point that economic modernisation eventually results in successful popular rule. Not to mention that younger economies like South Korea and Taiwan did the same.
This greed-driven confidence was also led by the literature produced by the Academy.
Modernization theory, Wikipedia points out, began with Max Weber and Talcott Parsons, founders of sociology. But the argument that it culminates in the adoption of institutions compatible with public accountability like democracy climaxed in the mid-20th century with Seymour Martin Lipset:
“Lipset’s observation that democracy is related to economic development, first advanced in 1959, has generated the largest body of research on any topic in comparative politics.”
“Larry Diamond and Juan Linz, who worked with Lipset in the book, ‘Democracy in Developing Countries: Latin America’, argue that economic performance affects the development of democracy in at least three ways. First, they argue that economic growth is more important for democracy than given levels of socioeconomic development. Second, socioeconomic development generates social changes that can potentially facilitate democratization. Third, socioeconomic development promotes other changes, like organization of the middle class, which is conducive to democracy.
“As Seymour Martin Lipset put it, ‘All the various aspects of economic development—industrialization, urbanization, wealth and education—are so closely interrelated as to form one major factor which has the political correlate of democracy’.
Despite all there, it remains controversial, especially at the historical margins, such as Germany’s late turn away from authoritarian rule.
https://en.wikipedia.org/wiki/Modernization_theory#Modernization_and_democratization
Thus, there were great expectations for China’s future. If Chile could lead Latin America towards prosperity and popular government, which it successfully did — why not China?
The expectation was hard buck. And few did.
CIA analyst Michael Pillsbury led President Carter to seek great military ties with China — a reality that the Clinton’s later exploited to their benefit. As have other Democrats like California Senator Diane Feinstein.
But, later, Pillsbury also did an about face. “In 2015, a former CIA Director revealed that a book called ‘The Hundred-Year Marathon’ ‘is based on work Michael Pillsbury did that landed him the CIA Director’s Exceptional Performance Award.’ The official website has declassified documents and photos that illustrate the book.” (Wikipedia bio page)
“The Hundred-Year Marathon” demonstrates that China deliberately hid her deeper agenda though calculated public conciliation to the West and patience, as well as a long sustained mission of intellectual property theft from our welcoming, porous, open society.
And during the past decade, Xi — the leader heading the nation as her rapidly aging demographic yields to the collapse of consumption led growth model and the end of China’s fast economic growth — drove the greatest centralisation of state power in China’s history since Mao himself,p. And now he hopes to ride her to World dominance.
The geo-strategist Peter Zeihan argues that China knows that crises lead to the break up of China, historically. Xi needs National unity to prevent this, even at the price of totalitarianism.
Zeihan has repeatedly and loudly proclaimed that China will be the first developing nation in history to grow old before (thoroughly) growing rich.
My point is that the stakes are very high for China, and its risk of civil unrest and otherwise crumbling into division and civil war are growing. Especially if a war invading Taiwan leads to a stalemate. But if the German people can withstand division into three different states, why couldn’t China, too?
Aye, there’s the rub. The magic in ‘The Mandate of Heaven’ is that once trust is between the Rulers and the Ruled is broken, it cannot easily be restored.
What could be more American than to promote democracy abroad and get rich as the Chinese were doing?
My final point is this one, Neo. The positive expectations for China were not the surprise. It’s the revelation of a hidden agenda to the West, followed by (under Trump) a fast reversal. Even though only partial.
AS the fictional character mentoring Edward Snowden in “Snowden” (2016) says to him: “In 20 years, Iraq will be a hellhole nobody cares about. Terrorism’s a short-term threat. The real threats will come from China, Russia, Iran. and they’ll come as SQL injections and malware.” (Ah. If only it were that simple and in sequence! See “The Nuclear Jihadist.”)
geo-strategist Peter Zeihan
The Wiki biography of the man makes him sound like a hustler who sells speeches and working papers to the gulled.
I knew from day 1 if Sundowner was installed Taiwan and Israel were screwed.
Israel is doing better than it ever has. Iran would be a threat if it had nuclear weapons, but it hasn’t built them yet.
And in 1992 the probability of Russia invading Ukraine looked rather low too.
In 1992, Russia had > 3x the population of the Ukraine; it still does. Taiwan’s not getting appreciably more populous vis a vis China or anyone else.
TJ:
Thanks for that.
However, I have to say that I knew the investors saw China as a great place for investment. Their motive wasn’t hard to understand. And I also knew about the theory that China would change and become more Western-like in the process.
It just didn’t seem all that believable to me. And it always seemed dangerous to outsource so many industries to China. It seemed very short-sighted.
I also assumed China had a hidden agenda. I’m not saying “I’m so smart,” or that I know so much about China. I don’t. But it just seemed logical to me that counting on this huge sea change in China was not a great gamble to take in the long run.
}}} Indeed. Ninety percent of the high level computer chips made in the world are made in Taiwan.
A war between China and Taiwan is basically an end to technology advance for, maybe, a decade.
This is greatly overstated. Massively so.
Intel has fabs in multiple places in the USA which are capable of everything they do in Taiwan (I am actually at one as I write this, doing support work, not as an Intel employee).
Yes, they will likely take some time to ramp up to the same kind of volume as Taiwan, but they are actually in the process of building more here at this location as well as expanding their capabilities of what is in-place. They have already initiated a new, very large, fab, in Southern Ohio.
Also, equally important, IBM has recently announced/released a new tech for commercial realization, which should be able to do processes down to 2nm, which is half the size of the current Taiwan fabs, and is expected to become available commercially by 2024/25 — so the current fabs in Taiwan will be superseded in a very short time. It’s a VERY dynamic industry.
I suspect part of this happening is the vulnerability to single-sourcing issues brought forth first by Covid, then by the trucking/shipping issues of the last year or so.
I will state that, if you’re looking at buying a new computer, now might be a good time to do it, as yes, you might expect a year or two of higher prices as demand competes with supply.
Of course, if China does nothing, well, nothing is going to happen directly, though even saber-rattling can make supplies uncertain and jack prices, too.
}}} Yup, outsource to China, and soon they will be selling your technology at reduced prices under their own label. So many mangers are short-term thinkers.
Number one, this is Taiwan, on the computers, at least — not the same as China, and second, I can pretty much guarantee that, if Taiwan appears to be losing to China, there will be a number of missiles aimed at the fabs there. They will not be intact.
Realize, the real value of modern Stuff lies in the IP involved, and the knowledge required to “make it” once designs are finalized is not the same as the knowledge required to design it.
China can keep making the same old shit, if they want to, sure.
Want to buy an iPhone 4, anyone?
And anything else… it really does not matter. There is so little money in actually making stuff, that they only real way to make money off it is to do it in the kind of volume — and labor prices — that China provides.
If we move production back to the USA, you can assume that all factories in question will be very highly automated and hire a fraction of the number of workers to do the same jobs. They will be high-paying jobs, but nowhere near enough to keep 30% of the population at work.
OK, as to my mention of the iPhone 4 — It’s the latest one I’ve got real data on, but there is zero argument to assume anything has changed.
Before reading:
The iPhone 4 was “Made In China”.
Retail price, ca. US$600.
And no, no matter how it got paid for, the full $600 was applied from different sources — you, your provider, etc.
So — of that US$600, ask yourself a question: How much of that went to China, in return for “making” it.?
TUESDAY, JULY 06, 2010
Apple iPhone: Designed in U.S., Assembled in China
https://mjperry.blogspot.com/2010/07/iphone-designed-by-apple-in-us.html
Now, let’s see as to your guess:
100? Nope.
50? No.
25?!?!? Nuh-uh.
TEN DOLLARS!!!! No sirree.
Under US$7 went to China to make it.
Yes, right about ONE PERCENT of the cost.
The rest went to Apple, to various Japanese, Korean, and American subcomponent makers/designers, etc, as well as about 8% to actual materials costs.
MAKING SHIT DOES NOT PAY ANY LONGER.
There is wealth to be made, but ONLY when you can do it on a large scale.
THIS is why it’s all gone overseas to China, Korea, Vietnam, Malaysia, where the labor is still cheap.
NOTE that it’s also been coming steadily back for over a decade — look up “Reshoring”, which is the term that was invented for it.
Fact is, though, that if it does come back, it’s to a heavily automated factory that works with far far fewer people and lots of robots.
This (assuming it’s the clip I believe it to be) is the scene
https://www.youtube.com/watch?v=GCQpMT_iL9U
from Minority Report — yes, it’s fiction, but you can rest assured it’s pretty close to the factory of the future — missing only an overseer to hit the “stop!!” button.
“under $7 went to China to make it”
The $7 is for *assembly.” The $187 shown for ‘materials’ certainly has a high manufacturing component–chips, display screens, etc. These are not raw materials.
You should have began “with the installation of Biden”, not the election of.
Thank neo. Read Pillsbury and some of his sources.
Modernisation theory sure seems to be successfully practiced in a lot of places. When people have stakes in improved lives, they want to risk their stuff less, and demand more accountability to those they pay to help them stay safer.
The question is, as always— where is the tipping point in the process? In a nation the size of the US, but with stark poverty and a population five times ours, it’s going to take a while for the self-interest to kick in for the Chinese.
In 2007, I was renting a condo in Summit County, Colorado (home of resorts like Copper Mountain, Keystone, Breckenridge).
My landlord was transitioning from being a mountain bum who teaches snowboarding to a day job at a bank in Denver. But what was more interesting was his girlfriend born in China.
Her parents raised her in Northern Virginia. She was working on her MS in material sciences at the Colorado School of Mines; her older brother was finishing his doctorate in the same field at the University of Minnesota. And I had old friends in both places coming out of those programs. Thus, we had to share some things.
For example, what was her father grooming the kids for? Making computer chips in China’s factories, some of which her father owned — the family business.
I shared a perspective with her from a Dutch investment advisor working in China. His summa was this: what’s happening in China is occurring in so many places, so fast, and on such an enormous scale that no single observer can get their minds around it!
I asked my landlord’s GF if she had been to China? Yes she had. A few times. Because my University best buddy had had a Chinese girlfriend in the 1980s, too, but who hadn’t, then I asked the naïf’s question: What was it like?
She said that back then, before she was born, her grandmother lived in a village without any roads. Just mud.
The was immense rural poverty still, in 2007 — and now, today in fewer places, but still for many hundreds of millions. But her memory was that of building and improvement that had transformed her most honorable elder’s lives completely — it even astonished her to say this in 2007.
The world has never witnessed the rapid rates of urbanisation in China, before.
And Southeast Asia is undergoing the same pneumatic rush forward during this and the next decades.
If there is a single book of photos, maps, and stories I most want to read, it is ones on the past, present, and future of urban building in China and SE Asia! A comparative history of both.
The US reached 50% city life in 1920, decades after England and the France. That positively glacial transformation of life reached 50% worldwide in 1998. And is reckoned to be around 85% late this century.
Rome was the first city to reach one million in population around 2,000.
The two generations acceleration of lifestyle change is breathtaking, and epic. Transformative. And crazy. And with it, a re-greening of the planet as people leave behind traditional occupations, all occurring within our lifetimes and our children’s.
But who here fathoms it all, measures it all? Documents it all? No one, perhaps?
OBH –
Intel is still at 7nm, 5nm won’t be online for at least another 8 months, in the meantime TSMC has been producing 5nm chips for AMD. In Taiwan.
The loss of Taiwan would be bad for our chip production, but not a complete disaster, I agree. But I hope the missiles aimed at those fabs are really big ones, so that theres only tiny peices. China does some pretty good reverse engineering. Jumping from 20nm to 5 would be a killer for them.
An ounce of prevention… That ounce is just quiet notification to Xi that we will enter any battle between Taiwan and China on Taiwan’s side, irrespective of diplomatic niceties.
BTW, Don’t mistake the idiosyncrasies of the semi business for the real world. “Things” still need to be made, and traded. It’s called “the economy”. That pizza isn’t going to be delivered virtually, and that requires a bunch of “things”.
Google earth is interesting.
For example, see the Three Gorges Dam. Couple of notes. I’ve looked at it and it seems real. And another time it seems far too neat and put-together and may validate the accusation that an artifact was introduced into the software. But, in any case, from time to time the overheads look different.
There was some fuss a year or so back about whether excess rains were reaching its specs limit and it may go, and how terrible that would be. So somebody faked it.
Goggle Earth gives elevations; above the dam and below the dam. And lots of pix of cities and manufacturing on its banks downstream.
It would take more than modified Lancasters of 617 Squadron to take it out, but….conventional cruise missiles might, should they evade the Chinese IADS. Or maybe somebody has some hypersonics in the root cellar someplace.
There are several other large dams with similar results on order should they fail.
Stored energy is always a problem. I wonder if the Chinese consider these a version of a large barrel of black powder in the basement with the fuse going out the window and nobody knows where the other end is.
Another analogy is that there isn’t much explosive in a blasting cap. What matters is what’s sitting on the blasting cap. And it’s a lot easier to move a blasting cap than a thousand-pound bomb, and if the other guy’s thousand-pound bomb is approachable….
It would be….hilarious isn’t the word I’m looking for…if Taiwan were holding China hostage by the threats to the major dams.
And if China did take Taiwan–Uke resistance likely being studied and sniffily dismissed in Chinese general staff meetings–there wouldn’t be any industry more complex than a cigarette machine left.
A Putinlesson might be….not worth it, guys. Let’s just keep making faces across the Strait.