US Policy on Chinese Talent Key to China Winning Tech Race


SCMP says in its article “Tough US immigration policy could be the key to China winning technology race, says top AI investor” that US crackdown on Chinese and Chinese-American reserachers benefits China’s development of technology, especially artificial intelligence.

It quotes Ning Tao, president and partner of Sinovation Ventures, one of China’s leading venture capital businesses with a focus on AI, “While the US is driving talent away, it is the perfect time for us to race to bring them back to China. This talent would be the key asset in fuelling China’s rise in the field.”

In the 1950’s US racial discrimination against Chinese talent drove about 50 top Chinese scientists and engineers back to China, who have helped developed among other things, atomic bombs, missiles and satellite. The US is now repeating its folly again.

Comment by Chan Kai Yee on SCMP’s article, full text of which can be viewed at https://www.scmp.com/news/china/diplomacy/article/3035546/tough-us-immigration-policy-could-be-key-china-winning.


Tech war with the US is spurring Chinese firms to develop their own chips, says venture capitalist


Published Mon, Jul 1 2019 • 10:22 PM EDT Updated 6 hours ago

Huileng Tan@huileng_tan

Key Points

  •  “Huge amounts of capital and talent are going to be thrown at building self-reliance and establishing a kind of parallel ecosystem here without dependence on U.S. chips, operating systems,” said Ben Harburg, managing partner of MSA Capital, a Beijing-based venture capital firm.
  • A homegrown Chinese semiconductor industry will likely hurt American chip makers as China will aggressively push their chips not just domestically but to other markets, said Harburg.

China going to work toward self-reliance in chips: MSA Capital

The U.S.-China trade war and the threat that Chinese firms could be cut off from using American technology is boosting China’s push for its own semiconductor industry.

“Huge amounts of capital and talent are going to be thrown at building self-reliance and establishing a kind of parallel ecosystem here without dependence on U.S. chips, operating systems,” said Ben Harburg, managing partner of MSA Capital, a Beijing-based venture capital firm.

“The rationale is that this moment created demand. Previously, it didn’t have demand for those Chinese chips,” Harburg told CNBC Monday at the World Economic Forum in Dalian, China.

While there was government money in the past to back such businesses, the understanding was that there were always U.S. chips to fall back on.

“That has changed now where there was a moment of complete desperation where there wasn’t an alternative to U.S. chips,” said Harburg, who added that MSA Capital is now investing more in core technologies like chips, core artificial intelligence and companies that aren’t dependent on U.S. chips.

Last month, Chinese tech giant Huawei was placed on a U.S. blacklist that required American firms to obtain government permission to sell to the company. The telecommunications equipment maker relies on some key components from U.S. firms and software from Google and Microsoft. Washington has granted a 90-day reprieve for now, but the threat remains a major problem for the company.

Huawei rival ZTE faced a similar situation last year, which significantly damaged the company.

A homegrown Chinese semiconductor industry will likely hurt American chip makers as China will aggressively push their chips not just domestically but to other markets, said Harburg.

“American companies in the hardware space like Apple have priced themselves out of markets like Africa. So if American chips aren’t going in there, it’s Chinese chips that are going into the phones being sold locally, ” he said.

Chinese tech manufacturers will also start targeting consumers in smaller cities in China, Harburg added.

Over the weekend, U.S. President Donald Trump suggested he will be reversing his government’s decision to ban American companies from selling products to the tech giant. Still, Trump said the issue of Huawei will be resolved only at the conclusion of the negotiations.

— CNBC’s Arjun Kharpal contributed to this report.

Source: CNBC “Tech war with the US is spurring Chinese firms to develop their own chips, says venture capitalist”

Note: This is CNBC’s article I post here for readers’ information. It does not mean that I agree or disagree with the article’s views.


US might be the biggest loser in the tech war


Ko Tin-yau
Jun 28, 2019 10:01am

US Treasury Secretary Steven Mnuchin said on Wednesday that the United States and China were close to a trade deal, and that he believes the weekend talks between the two sides will help take the process forward.

“We were about 90 percent of the way there (with a deal) and I think there’s a path to complete this,” Mnuchin told CNBC.

He said he’s confident that US President Donald Trump and Chinese leader Xi Jinping, who will meet during the G20 summit in Japan, can make progress in the stalled trade talks.

“President Trump and President Xi have a very close working relationship. We had a productive meeting at the last G-20,” Mnuchin said, adding that there could be a win-win situation for both nations.

“I think there is a good outcome for their economy and the US economy to get balanced trade and to continue to build on this relationship,” he added.

Mnuchin’s words and tone suggest that Trump may focus more on improving the trade deficit situation and put less emphasis on urging China to reform on matters such as cutting government subsidies, ending forced technology transfers, etc.

Some might question why Washington seems to have suddenly softened its stance.

The answer may lie in a New York Times report that outlined how some big tech firms have found a way to bypass the US government ban on selling products to Huawei.

By manufacturing outside the US, industry leaders including Intel and Micron can avoid labeling goods as American-made, New York Times reported, citing unnamed sources. Sales through this channel ares already said to amount to hundreds of millions of dollars.

If the US-derived content of a product is below 25 percent, they are not subject to the ban.

This underscores how difficult it is for the Trump administration to contain companies like Huawei.

More seriously, if this becomes a trend, Trump’s intention to contain China’s tech industry could backfire and the US may end up the biggest loser.

This article appeared in the Hong Kong Economic Journal on June 27

Source: ejinsight.com “US might be the biggest loser in the tech war”

Note: This is ejinsight.com’s report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.


U.S. blacklists 5 Chinese groups involved in supercomputing


By Associated Press

Published: June 21, 2019 3:08 p.m. ET

The U.S. has called them national security threats and is cut them off from critical U.S. technology

WASHINGTON (AP) — The United States is blacklisting five Chinese organizations involved in supercomputing, calling them national security threats and cutting them off from critical U.S. technology.

The move Friday by the U.S. Commerce Department could complicate talks next week between President Donald Trump and his Chinese counterpart, Xi Jinping, aimed at de-escalating a trade dispute between the world’s two biggest economies.

Commerce is putting five Chinese organizations, including supercomputer maker Sugon, on its so-called Entity List, saying their activities are “contrary to the national security and foreign policy interests of the United States.” The other four are the Wuxi Jiangnan Institute of Computing Technology and three Sugon affiliates.

Sugon and the Wuxi Jiangnan Institute are involved in China’s push to develop exascale high performance computing that can assist China’s military modernization.

The blacklist effectively bars U.S. firms from selling technology to the Chinese organizations without government approval.

Commerce last month blacklisted telecommunications giant Huawei 002502, +3.39% , heightening tensions with Beijing .

The U.S. and China are locked in trade combat over Beijing’s aggressive drive to challenge American technological dominance.

Trump has imposed 25% tariffs on $250 billion in Chinese imports and is preparing to target another $300 billion, extending the import taxes to virtually everything China ships to the United States. China has retaliated with tariffs on U.S. products.

Talks to resolve the dispute broke off last month. But Trump and Xi are scheduled to meet next week at the Group of 20 summit in Osaka, Japan, to get the negotiations back on track.

“Adding more Chinese companies to the U.S. bad guys list may be seen as a way to ramp up the pressure on China,” said Amanda DeBusk, a partner at Dechert LLP and the former Commerce Department assistant secretary for export enforcement. “However, the Chinese may see this as ill-timed bullying. They cannot be seen as making concessions to the United States, so this may have the effect of hurting any chances for trade agreement.”

Source: marketwatch.com “U.S. blacklists 5 Chinese groups involved in supercomputing “

Note: This is marketwatch.com’s report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.


Europe Would Continue to Choose Huawei 5G despite US Pressure


Stratfor says in its article “Why Europe Won’t Shut the Door on Huawei” that though due to US warning on security in using Huawei, EU will only pressure member states to “update their security requirements for 5G partners to mitigate the potential risks”. It will let its members decide whether to use Huawei.

However, the article concludes: “(M)any countries that already use Huawei’s equipment for 4G may ultimately decide that the easiest, cheapest and fastest route is to continue using the Chinese company for their 5G networks. But even then, they’ll probably still introduce some restrictions, or at least additional controls, on the company — both to appease the United States, and to address domestic concerns about the security implications of such a crucial technology.”

Comment by Chan Kai Yee on Stratfor’s article, full text of which can be viewed at https://worldview.stratfor.com/article/why-europe-wont-shut-door-huawei


China calls in foreign tech firms after Huawei sales ban: sources


June 9, 2019 / 5:04 PM / Updated 9 hours ago

Cate Cadell, Michael Martina

BEIJING (Reuters) – China summoned global technology companies for talks last week following last month’s U.S. ban on selling technology to China’s Huawei Technologies Co Ltd, two people familiar with the matter told Reuters on Sunday.

The blacklisting of Huawei, the world’s largest maker of telecoms network equipment, bars U.S. companies from supplying it with many goods and services due to what Washington said were national security issues, a potentially crippling blow that sharply escalated U.S.-China trade tensions.

Huawei denies that its equipment poses a security threat.

Soon afterwards, Beijing announced it would release its own list of “unreliable” foreign entities. It also has hinted that it will limit its supply of rare earths to the United States.

A person at U.S. software giant Microsoft Corp said the company’s session with Chinese officials was not a direct warning but it was made clear to the firm that complying with U.S. bans would likely lead to further complications for all sector participants.

The company was asked not to make hasty or ill-considered moves before the situation was fully understood, the person said, adding that the tone was conciliatory.

Microsoft declined to comment.

The New York Times first reported on the meetings led by the National Development and Reform Commission (NDRC), saying major foreign tech firms were warned against complying with a U.S. ban on selling American technology to Chinese firms or potentially face what the newspaper described as dire consequences.

The NDRC did not immediately reply to a faxed request for comment from Reuters.

It is not unusual for China to summon representatives of foreign and domestic companies, sometimes in groups, to make its views heard.

One person with another U.S. tech company in China who was briefed by colleagues on the company’s meeting told Reuters that the tone was “much softer” than expected.

“No mentioning of Huawei. No ultimatums. Just asked to stay in the country, contribute to the win-win negotiation,” the person said, declining to be identified by name or company given the sensitivity of the matter.

“I think they realize they still need U.S. tech and products for now; self-sufficiency will take a long time, and only after then they can kick us out,” the person said.

The New York Times reported that other companies summoned for meetings last Tuesday and Wednesday included U.S. computer maker Dell Technologies Inc, South Korea’s Samsung Electronics Co Ltd and SK Hynix Inc, and British chip designer ARM, which last month halted supplies to Huawei.

Samsung and SK Hynix declined to comment. Dell did not immediately respond on Sunday to an emailed request for comment and a spokesperson for ARM could not immediately be reached.

Separately, the editor of China’s Global Times tabloid said on Saturday that Beijing was preparing to curb some tech exports to the United States. In a tweet, Global Times Editor-in-Chief Hu Xijin said that China “is building a management mechanism to protect China’s key technologies.”

“This is a major step to improve its system and also a move to counter U.S. crackdown,” he added. “Once taking effect, some technology exports to the U.S. will be subject to the control.”

Hu did not cite any named sources in his tweet. The Global Times is a tabloid published by the ruling Communist Party’s official People’s Daily.

Also on Saturday, Chinese state media outlet Xinhua reported that the NDRC would organize a study to establish a “national technological security management list system”.

Last week, Reuters reported that Facebook Inc was no longer allowing pre-installation of its apps on Huawei smartphones.

Reporting by Cate Cadell and Michael Martina in Beijing; Additonal reporting by Ju-min Park in Seoul and Stella Qiu in Beijing; Writing and additional reporting by Tony Munroe; Editing by Christopher Cushing

Source: Reuters “China calls in foreign tech firms after Huawei sales ban: sources”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.


China’s tech war with the U.S. heats up as Xi urges self-reliance


Lucas Niewenhuis April 27, 2018

If it’s imported from the U.S. and has electric wires in it, China wants no more of it.

While largely agricultural tariffs and fees have featured prominently in the U.S.-China trade tiff so far, the overall arc of what may yet become a full-scale trade war will likely be highlighted by a years-long cutthroat competition in technology.

“In the past we tightened our belts, gritted our teeth, and built the two [atomic and hydrogen] bombs and a satellite… In the next step of tackling technology, we must cast aside illusions and rely on ourselves,” urged Xi Jinping (in Chinese), which New York Times reporter Chris Buckley called “telling comments.” Xi’s words mirror the Made in China 2025 policy, released in 2015, which aims to rocket the country to the top of global supply chains for high-tech goods ranging from smartphones and electric vehicles to airplanes and artificially intelligent robots. China is setting out to do so by a combination of government funding and incentives for the private sector, and dramatic re-resourcing for a huge array of technology. Here are some of the latest trends:
•Domestic smartphones are gaining market share, CNBC reports, as Apple’s iPhone lost its #4 position to Xiaomi. Consumers are increasingly opting for local brands such as Huawei, Oppo, Vivo, and Xiaomi, even — or especially — as the overall demand for phones falls.
•“Tesla has over 300 Chinese startups hot on its tail,” Nikkei reports, illustrating how high domestic investor enthusiasm for electric vehicles has become. Also in the news, per Caixin: Electric vehicle-maker Singulato set to raise $476 million.
•A state-backed semiconductor fund is filling up, Reuters says, as a second round of funding for 120 billion yuan ($19 billion) was “near to closing,” on top of $22 billion from the previous round.

Meanwhile, the U.S. is shooting itself in the foot, James Andrew Lewis of the Center for Strategic and International Studies argues, as the seven-year ban on selling American equipment to Chinese telecom giant ZTE “will only encourage foreign suppliers to rush into the space vacated by U.S. companies,” and “reinforce the Chinese government’s desire to replace U.S. suppliers with Chinese companies.”

Source: SubChina “China’s tech war with the U.S. heats up as Xi urges self-reliance”

Note: This is SubChina’s report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.