We Need Our Mojo Back Vis-à-Vis China

Bill Gertz is the dean of American defense journalists, and brings vast knowledge and an abundance of sources to his latest book. His review of China’s efforts to gain a decisive edge in military technology is indispensable reading for anyone concerned with the rapid rise of a prospective adversary. Gertz is a reporter first and foremost, and Deceiving the Sky: Inside Communist China’s Drive for Global Supremacy distills the thinking of America’s military and intelligence establishment in a terse and highly readable presentation. 

What We Don’t Know

The book’s lacunae are less the fault of the senior defense correspondent for the Washington Times and Washington Free Beacon than of the American national security establishment itself. Our institutions lack a clear understanding of what China is doing and what we should do in response. Amid the impressive mass of detail, readers are left to wonder what the Chinese really want. If they were to take over the world, what would they do with it? In the case of Nazi Germany or the Soviet Union, we know the answer, because we saw Germans and Russians at work as occupiers. China reached its present borders for the most part by 800 C.E. under the Tang Dynasty and has shown little interest in sending troops to occupy other countries. 

A related question involves China’s order of battle. What does China hope to achieve with its anti-satellite weapons, carrier-killer missiles, anti-submarine devices and so forth? Gertz presents the sort of war scenario that staff officers grind out as a matter of course, without explaining what Chinese war aims might be.

A key issue is the distinction between China’s notorious theft of U.S. technology and its homegrown innovations. Not until page 185 do we read of the most striking and strategically important Chinese invention:

A major worry for American defense planners and intelligence strategists is China’s drive to deploy extremely secure quantum communications. This development was announced by China in August 2016 . . . Quantum communications for the Chinese are designed to produce encryption that is unbreakable—a capability that would hamper what has been a strategic advantage for the United States in relying on the very capable code breakers at the US National Security Agency.

Earlier in the book, Gertz had spent four pages recounting China’s theft, in 2013, of U.S. plans for the C-17 military transport plane. Reprehensible as that may be, it was not a game-changer. Quantum communications, a Chinese innovation, inaugurates a revolution in signals intelligence.

Gertz discusses Washington’s campaign to dissuade its allies from buying fifth-generation (5G) mobile broadband technology from China’s national champion Huawei Technologies. By the time the book went to press, it was evident that the initiative was a humiliating failure; not a single country on the Eurasian continent bent to American threats, which included the suspension of intelligence-sharing. Quantum communications help explain why. 

About to Go Dark

Not only the Chinese, but South Korean, Japanese, British and other teams are building the capability to embed quantum communications in the new 5G networks. Not only will China go dark to U.S. signals intelligence; the rest of the world will, too, and in short order. Huawei’s 5G systems will wipe out America’s longstanding advantage in electronic eavesdropping. The U.S. intelligence community spends $80 billion a year, mostly on SIGINT, and the whole investment is at risk. Washington’s view, dutifully reported by Gertz, is that Huawei’s dominance in 5G systems will allow China to steal everyone’s data. The reality is far more ominous, as I understand it. China will enable the rest of the world to cut off America’s access to everyone else’s data. When Secretary of State Mike Pompeo urged a senior German official not to buy Huawei’s broadband, the German replied that China hadn’t eavesdropped on Chancellor Merkel’s cell-phone conversations, as had the United States.

Huawei owns 40 percent of the patents related to fifth-generation broadband, largely because it spent twice as much on research and development as its two largest rivals (Ericsson and Nokia) combined. The strategic challenge to the United States comes not from Chinese technology theft, obnoxious as that is, but from Chinese innovation backed by state resources. The American intelligence community realized too late that China had gained the upper hand, and convinced the Trump administration to try to postpone the 5G rollout until it could work out what to do next. The failure is of such catastrophic proportions that no one in a position of responsibility dare acknowledge it for fear of taking the blame.

Domination of E-Commerce and E-Finance

Huawei’s vision of a global broadband market under its domination is hardly a secret. This is a case where China has advertised its intentions while the United States ignored the issue. Since 2011, the company’s website has promulgated an “eco-system” enabled by broadband networks that in turn would bring in Chinese e-commerce, e-finance, logistics, and marketing—in short, the whole array of business and financial services that will integrate the labor of billions of people into the greater Chinese model. 

The world will become a Chinese company store: Chinese banks will lend the money, Huawei will build the broadband network and sell the handsets, Alibaba and JD.Com will market the products, Ant Financial will make micro-loans, and Chinese companies will build airports and railroads and ports. As an investment banker for a Hong Kong boutique from 2013 to 2016, I saw this first hand, and reported it here. Among other things, Huawei is building most of Mexico’s new national broadband network, including 5G capability, in a consortium with Nokia financed by a group led by Morgan Stanley and the International Finance Corporation. Huawei also dominates telecommunications infrastructure in Brazil and other Latin American countries. China’s tech dominance in America’s neighborhood, remarkably, has occasioned no official comment from Washington.

In my view, this is far more alarming than what Gertz envisions. He writes, “China will control all deals and win any business arrangements it seeks by dominating the information domain and thus learning the positions of bidders and buyers. All Chinese companies will be given advantages in the marketplace.” 

That simply isn’t the way things work. China will lock whole countries into Chinese hardware through state-financed national broadband networks, including Brazil and Mexico, where construction is underway. It understands the network effect that made Amazon and Facebook dominant players in the U.S. market, and will use its financial and technological head start to establish the same sort of virtual monopoly for Chinese companies throughout the Global South.

China envisions a virtual empire, with military deployments to protect key trade routes, starting with oil from the Persian Gulf. China’s navy established its first overseas base in Djibouti last year. Meanwhile China has invested heavily in high-tech weaponry, including satellite killers. During the first minutes of war, the United States and China would destroy each other’s communications and reconnaissance satellites. But China has a network of thousands of high-altitude balloons around its coasts, too many for U.S. forces to destroy. 

Why a Shooting War Is Unlikely

The dog that doesn’t bark in this particular night is China’s land army. China has about 40,000 marines and an additional 60,000 seaborne mechanized infantry, enough to invade Taiwan. Otherwise its ground forces are feeble. China spends about $1,500 to arm an infantryman, as compared to $17,500 for his American counterpart. China owns no ground-attack aircraft like the American A-10 or the Russian SU-25. Unlike the United States, China hasn’t equipped its forces for any foreign expeditions, excepting of course the threat against Taiwan. With few exceptions its military priority is control of its own coastline. That in my view is why a shooting war is not likely. America cannot win a war on China’s coast, and China has scant interest in fighting anywhere else.

As we examine the details, the picture of a Soviet-style communist regime bent on world domination falls apart. China’s concept of world domination is so different from what we imagine that it has halfway come to fruition before we noticed it. The broader issues are too complex to address in a review, but I feel obliged to add that there is quite a different way of looking at present-day China, as an imperial system with a 3,000 year history. 

In extensive contacts with Chinese officials, I haven’t met a single dedicated communist, except for the distinguished professor of Marxist-Leninist studies who asked me to help his child find a job on Wall Street. I do not believe in Gertz’s distinction between the good Chinese people and the wicked communist leaders. The emperor (the leader selected by the Mandarin caste that today masquerades as communists) is the capo di tutti capi, whose job is to limit the depredations of local power centers and maintain order. Most mainlanders will tell you blandly that, without an emperor they would kill each other, as they indeed have done after the fall of every Chinese dynasty.

No one should minimize the brutality of the present dynasty by any means; but it is no more reprehensible than the Ming, who buried a million forced laborers in the Great Wall, or the Qin, who destroyed the whole literary record of the Chinese kingdoms that preceded it and buried alive hundreds of scholars to ensure that no memory of the past survived. Every Chinese in a position of influence, when asked about the Muslim Uyghur minority in China’s far West, will say matter-of-factly, “We’re going to kill them all.” China has been exterminating “unruly barbarians” on its borders for thousands of years. That is why the Huns came to Europe and the Turks came to Asia Minor: Chinese punitive expeditions against these peoples forced them to migrate westward.

In China’s view, the “Century of Humiliation” that lasted from the First Opium War of 1848 to the Communist Revolution of 1949 was a temporary aberration that displaced China from its dominant position in the world economy, a position the present dynasty seeks to restore. If we do not want this to happen, we will have to dominate critical technologies, including quantum computing, quantum communications, broadband, Artificial Intelligence, and missile defense. 

Weak Proposals

The recommendations that Gertz offers at the book’s conclusion do not convince me. He proposes to disengage economically from China; I should think that our object should be to introduce innovations that disrupt and discredit China’s state planning. We have none at the moment, but that is because American high-tech industry has invested overwhelmingly in software and left the manufacturing to Asia. We require a revival of American R&D on the scale of our response to Sputnik. Gertz also proposes “covert financial warfare” to disrupt China’s overseas borrowing. He does not seem to realize that China is a net creditor to the extent of $1.6 trillion, which means that it can finance its own requirements readily. He wants to crack down on Chinese nationals abusing their position in the United States, and so forth.

None of this will make a difference. Our problem is far graver. China now graduates four STEM bachelor’s degrees to every one of ours, and the ratio is rising. Foreign students earn four-fifths of all doctoral degrees in electrical engineering and computer science at U.S. universities. Because we have so few engineering students (just 5 percent of undergraduate majors), engineering faculties are small, which means that most of the foreign students return to teach in their own countries. The United States has trained a world-class engineering faculty at Chinese universities, such that the best Chinese students stay home. I know Chinese IT managers who will not hire Chinese students with a U.S. bachelor’s degree, because the Chinese programs are more rigorous.

We can only best China through innovation, and we are losing our edge in that regard. Nothing short of a grand national effort on the scale of the Kennedy moonshot or the Reagan Cold War defense buildup will get our mojo back.

Reader Discussion

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on September 12, 2019 at 09:03:04 am

This is a brilliant and chilling piece of writing.

You wrote: "Nothing short of a grand national effort on the scale of the Kennedy moonshot or the Reagan Cold War defense buildup will get our mojo back."

When we have one party (the Democrats/Marxist confab) bent on overthrowing legitimate elections here because they lost and are advocating open boarders and worse--and the other party (Republicans) who no longer seems to stand for anything in particular and have lost the spine evolution supposedly put in our backs, it will be impossible to coalesce into one cohesive unit to defeat an enemy as organized and driven as 21st century China.

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on September 12, 2019 at 09:41:18 am

Nice writing.
But it was obvious over a decade ago when I was telling my kids then... China is not fighting a military war with the USA... they are waging an economic war with the USA... and they are playing a "long" game... while we tend to play short 4 yr games. We are playing Poker and they are playing Go.

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on September 12, 2019 at 09:57:28 am

Is the ‘China graduates four STEM students for every one of ours’ just a canard? Many of the “engineers” China graduates would qualify as trade apprentices or technicians here.

Our problem meanwhile isn’t so much that we don’t put enough money into R&D, but that the university-DoD-NIH-large nonprofit axis is so good at turning cash into conferences and committees and grant administrators. China has its own risk factors too as Xi Jinping Thought could see funds being steered by guanxi more than by scientific or entrepreneurial merit.

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The Snob
on September 12, 2019 at 10:20:48 am

While all this planning for the future and the Chinese dominance is going on in Beijing, the US is contemplating the melting of the ice in Greenland. You can't win a struggle that you never even admit exists. With our eyes are focused on an impossible and out of our control 'threat' in climate we have no will or resources for another long term plan. Banning straws and plastic bags does nothing for the environment. It leaves some feeling content that they saved the world - as they drive off in their $100,000 EV.
I'm much more concerned about a future world where choices - politically and economically - exist. And what plan is in place to assure this will be our legacy.

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Image of mj
on September 12, 2019 at 10:24:55 am

I was 10 years old (1957) when Mao Zedong orchestrated "The Great Leap Forward". That edict was responsible for killing 45 million Chinese by working them to death, starving them to death, or beating them to death. Next came the "Cultural Revolution", beginning in 1962 and ending in 1976 ( the year of Mao's death). For 14 years China was in chaos, all directed by Mao Zedong. The children in middle schools, high schools, and universities were unleashed on the whole country to ferret out counter- revolutionaries, capitalist- roaders, and destroy the"capitalist past".
.. In 1970 China didn't or couldn't make anything that the world wanted (except weapons).Look what happened in less than 50 years.

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Frederick Edwards
on September 12, 2019 at 10:53:45 am

Excellent, important, well-argued wake-up call, strengthened further by the author abstaining from his usual name-dropping and self-congratulatory chest-thumping.

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Richard Schulman
on September 12, 2019 at 11:00:26 am

but that the university-DoD-NIH-large nonprofit axis is so good at turning cash into conferences and committees and grant administrators

I'd say this explains the fate of government funding generally (substituting "consultants" for "grant administrators" in appropriate cases). See, e.g., the billions spent on public schools which only ever seem to need even more money.

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on September 12, 2019 at 11:13:34 am

The Snob makes a rather good point re: R&D & conferences, etc.

But the real problem may have more to do with the "industry" that the above essayist inhabits (not intended as a slam upon this fine writer, BTW). while monies are quite frequently available for R&D, when it comes to "implementation", i.e. translating the specific R&D achievements into a *manufacturable^ / manufacturing product, the financial industry is UNWILLING to invest in these efforts as the costs are rather significant and would rather "slough it off" to an overseas *partner* (such as that term has come to be used) where costs are lower, regulatory hurdles are absent or minimal and where as Mr Edwards states below "labor" protections (and much worse) are either absent or unenforced.

AS I have written before, this has ripple effects throughout both the economy and the culture. In short, we lose not only the immediate fruit of our R&D prowess, we also lose the underlying technical expertise to a) make the product, b) refine and further innovate it, c) create spin-off technologies / products and, finally, d) dishearten, if not disenfranchise a substantial segment of a once thriving middle class comprised of support engineering disciplines and technicians, machinists and tooling engineers.

Imagine trying to ramp up or convert civil manufacturing to a war footing such as we did during the two great conflagarations of the 20th Century.

ain't gunna happen, boyos!

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on September 12, 2019 at 11:15:04 am

China owns Clinton and Fusion GPS. You think that soft coup was the American Left? They still can't figure out why they lost. No, it was China disrupting and distracting America.

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on September 12, 2019 at 11:54:07 am

Historically, China has dominated by requiring it’s trading partners to become vassals to the Chinese state. That same approach is being used today. Neighbors who are geographically close get conquered, but border expansion has typically been limited to current borders.

The barbarians of the Steppe were managed via trade and military force along the border. But predominantly by playing different tribes against one another so as to weaken their ability to combat China proper. Few nomadic tribes of the Steppes damaged China - to my knowledge only the Scythians, Huns, and Mongols were united enough to present a true threat to China proper.

Ghenghis Khan understood the risk to his people of Chinese and agrarian culture. The hardship of the Steppes created warrior tribes necessary to defeat China militarily (and only a few leaders could unite them into something resembling a nation necessary to combat China). But the massive size of the Chinese population and the attractiveness of its luxuries (and the luxuries of agrarianism) meant that Chinese culture would ultimately win the war, with the Mongols becoming Chinese and implementing Chinese dynastic methods of control over the empire (see Kublai Khan). Eventually subsuming Mongol culture and ending their temporary dominance.

As interesting is the approach China took to using trade to dominant their known world. The Chinese fleet of 1421 under Admiral Zhang He sailed known trade routes across the Indian Ocean to India, the Middle Easy, Indonesia, and as far as Africa. This was a demonstration of Chinese might and obtained submission of trading vassals to the Ming dynasty. These other nations retained their regional and internal authority but were economically dominated by a China leveraging it’s economic might and luxury goods (e.g. silk).

One can argue that from a Chinese perspective, the period from the destruction of the Ming fleet to present day represents and aberration from their historic norm of Chinese cultural and economic dominance of their known world.

Most American and Western leadership appear blind to this. Per the other comments, they’re focused on climate change and other naval gazing (interestingly, climate change is what is hypothesized to have made the Gobi desert appear more than 2,000 years ago thus forcing the Scythian nomads to invade China and the near east). Based Goldman’s analysis, my perspective is that Quantum Computing and 5G Networks are the modern equivalent of Chinese SIlk.

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Eric Youngstrom
on September 12, 2019 at 12:48:25 pm

Thank-you for the historical reference to the making of vassal states. I don't know enough Chinese history yet to of known they did that previously. (I do know the game Civilization however.) So the past couple weeks listening to these Democrat candidates... I have been telling my kids... If a Democrat wins... That Democrat president will bow and subserve the USA to the Chinese so much, we will effectively become a Vassal State of China. (They know the game too.) It is interesting to learn I wasn't too far off the mark.

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on September 12, 2019 at 14:20:01 pm

I don't see how the elites in the West are making a "mistake" about China. In fact, they are COLLUDING with the Chinese elitists to further accelerate the demise of the West, and drop into global dystopia. In short, this is a FEATURE, not a BUG.

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Eric Knight
on September 12, 2019 at 15:35:40 pm

1- Spengler says China's interest is protecting her coast.  If true, that means entrance by way of her back doors -- India, Mongolia, Russia, Afghanistan -- has strategic punch.

2- World domination of electronics/comms, which he says China intends, undercuts his argument that China entertains no ambition for world domination by the usual methods, namely, geographical.  If you can control fires, you can control land.  The fault is in thinking China can control fires enough to control land enough to dominate the world.

3- There has to be truth to his observation that Chinese are Chinese -- murderous -- whether with a Communist mask or not, so, one should not think Chinese would be different without that mask.  Yet, there has to be something, strategically and tactically, the Communist face specifically brings to the mixture that is China today.  Were China China -- murderous -- even without Communism, there would be no accounting for the huge success Christian missionaries of many persuasions experienced in China prior to Communist rampancy there and even still.  Communism brings some what's it to China.  ChiComs are not merely Mandarins under a different name.

4- The Kennedy-launched moon landing/STEM boom was a civilian objective, not a military one although indirectly it was, as are all governmental programs ultimately because government ipso facto is punitive authority.  In addition, it was undertaken with Congressional, meaning popular, approval.  Americans will not devote their totality to a military objective, especially a strategic one, unless they approve it Congressionally -- and not by a Congress who overrides their wishes, as one did for ACA, Obamacare -- or Presidentially and with a supportive Congress.  Inner meaning of sole Congressional power to declare war.

5- Unless she can occupy land -- occupy it, not just own it-- China's aspirations for world domination are weaknesses, not strengths.  She cannot occupy the land needed to dominate the world.  No one can.  No one sane would even want to, much less try to.  A lethal Chinese weakness: insanity.

6- Wall Street would benefit -- huge government spending of taxpayer wealth -- from the crash tech program Spengler advocates.  Everyone else?  Well, they would pay for it, like it or not.

7- I think an effective program, and far less costly money-and time-wise, to terrify China in her corset and disabuse her of insane ambitions, would comprise forcing American GOs and FOs -- and their pressed sycophants --to face strategic questions in classical terms -- namely, GEOGRAPHY -- report them straight-up to their Commander-in-Chief, and bear responsibility for not doing that or for larding their counsel with clichéd, obsolete, attenuated, and/or inaccurate descriptions of strategic -- namely, GEOGRAPHICAL -- conditions.

8- Electronics is fires.  Teilhard's Noosphere and a GO's or FO's hyper-range artillery.  Not China nor all the Mandarins in LA, Mombasa, and Gstaad can control that.  Use it, yes, certainly do, you are meant to.  Control it, no, never, impossible.

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David R. Graham
on September 12, 2019 at 16:51:08 pm

Venture capital hasn't touched manufacturing since the 2000 recession. The Asians (not just China) subsidize capital intensive manufacturing. We don't. If we want to keep our manufacturing we're going to have counter these subsidies one way or another.

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David Goldman
on September 12, 2019 at 18:06:39 pm

[…] David P. Goldman, Law & Liberty: We Need Our Mojo Back Vis-à-Vis China […]

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Does The U.S. Military And Intelligence Establishment Understand What China Is Doing? - HotNewsCast
on September 12, 2019 at 19:16:11 pm

Civilization is a great game! China is an incredibly old civilization and that memory seems to be guiding their current leadership.

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Eric Youngstrom
on September 12, 2019 at 22:02:11 pm

I doubt that China will "go dark" with its quantum communications - at least not anytime soon. It is very hard to do QC, and it most likely will only be used for a few highly sensitive fiber optic sites. 5G cellular is unlikely to use QC, as the technology isn't there as far as I know, and may not be there for a very long time. Also, QC is *not* a Chinese invention. The idea and the knowledge has been around for some time, and its has been experimented with in various countries.

The other threats, though, are real. China is very dangerous, and its vast population means it will be producing more scientists and engineers than the US. Although, speaking as an engineer, the outsourcing of engineering and software by US companies is such that I would not recommend it as a career for our young, and we are doing that damage to ourselves with no help from China.

Our best hope is that the corruption that is inevitable in a centrally planned system like China, and also in a society that as empty of trust towards other people as post communist China, will slow the giant down, or bring it to its knees.

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John in Phoenix
on September 12, 2019 at 23:56:42 pm

I can't help but feel like this discussion about the manufacturing base vis-a-vis national security misses an awful lot. In particular it seems like we are conflating overall manufacturing employment with the capability to manufacture arms.

"Manufacturing" encompasses everything from making turbine blades for an F-35's engine to making rubber dog $#@! by the cargo-plane load. China leads the world in the latter, for sure. But, they are still largely incapable of making the former.

Their home-built airliner is using Russian engines that aren't all that great and their rockets use Soviet-derived engines. Meanwhile, two private citizens in US are manufacturing and launching rockets far superior to the Long March series.

If you narrow your focus to advanced manufacturing, the US does not look so bad by comparison. There is a reason China's industrial espionage on US soil is so aggressive. Likewise, our industrial base to build things like fifth-generation fighters, nuclear submarines, or spy satellites is quite robust. All of these things are extremely specialized and China is not going to rapidly and simply convert people who are assembling iPhones into people capable of welding submarine pressure hulls.

Look also at fracking: here's an area where US innovators (largely small independent drillers) discovered ways to access previously-unrecoverable deposits, and in about a decade a large industry rapidly developed to design and manufacture novel tooling and materials supporting them. When the opportunity became more clear that industry did not want for capital. While I am quite fond of the software industry and its investors, who have made me a target of Sen. Warren's tax proposals, there is a lot of technology investment that happens beyond Sand Hill Road.

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The Snob
on September 13, 2019 at 00:33:33 am

One might say:

In the USA we are good at initial engineering.
(And we seem to like reinventing things from scratch.)

Over in China they are very good at re-engineering.
(They are great at copying existing designs and simplifying or modifying it to the materials and processes available.)

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on September 13, 2019 at 07:56:17 am

Your view does not square with extensive publicly available information on the subject. There is a crash effort underway at several entities (Toshiba, SK Telecom, University of Bristol among several others) to embed QC in 5G -- expect it to be implemented in two to three years. QC is not a Chinese "invention," just as the light bulb was not Edison's invention (a British physicist produced one 10 years before Edison got interested), but the practical electric light bulb was Edison's innovation, just as practical QC is a Chinese innovation. See for example:
"In February of 2018, ID Quantique, the Swiss leader in quantum communications, was acquired by South Korea’s SK Telecom to ensure security in the hyper-connected 5G era. This month, SK Telecom introduced its quantum-safe system on Deutsche Telekom’s trial network for live testing, with the ultimate goal of rolling it out to commercial networks in 2019. Meanwhile, Quantum Xchange is bringing the first commercial Quantum Key Distribution (QKD) network to the United States. And, using the same technology as SK Telecom, will generate quantum keys to protect data transfer from end-point to end-point. The company is closely monitoring the expansion to 5G and how it will affect mobile communications, including the recent proposal made to the International Telecommunication Union (ITU) by KT and LG Uplus to develop global standards for QKD that will forward quantum-safe technology and secure communications across 5G."

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David Goldman
on September 13, 2019 at 11:17:42 am


Good points and ones with which I substantially agree.

Cuppla points:

1) consider that the "electronic sub-components", and in many instances, the subsystems, are manufactured offshore as are (with some defense critical exceptions) the circuit boards upon which all the components and processors are placed.

2) If one looks at "innovation" over the centuries, one will find that there is both a "ripple" AND a "leapfrog" effect consequent to initial introduction and development (i.e., manufacturing) of new / advanced technologies. In simple terms, the more engineering and tooling capabilities / personnel a nation has, the greater the likelihood that a) additional developments / advancements will occur and b) the greater the likelihood that the same "tooling" and "engineering / R&D" expertise will be applied across industries / technologies. (I think Deidre McCloskey also covers this line of thinking in "innovation" as do a number of other current writers.
3) But yes, The ChiComms cannot manufacture turbine blades. HOW long before they are capable of doing so? Recall that the US could not manufacture steel to the standards set by the British in the 19th century. THEN, Carnegie and his engineers and tooling / process specialists developed a method of hardening steel during the process.
Are the ChiComms not intelligent enough to make similar advances?

4) to the extent that we allow them to "advance" we hamper our own efforts to "recover."

With this, I am not pleased but.....

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on September 13, 2019 at 12:36:01 pm


"the more engineering and tooling capabilities / personnel a nation has, the greater the likelihood that a) additional developments / advancements will occur"

No argument there, but my point is that if we look at cutting-edge manufacturing, I suspect the gap narrows considerably. A lot (perhaps most?) of China's industrial workers are working in fields and processes that were largely mature decades ago. Does having millions of workers pouring large sand castings or shooting plastic picnic benches translate to turbine blades or 19nm stereolithography?

"consider that the “electronic sub-components”, and in many instances, the subsystems, are manufactured offshore..."

Here in the Boston area I can find at least a dozen PCB fabs. Now, perhaps we're an outlier because of the density of universities and manufacturers, but it's not like we don't know how to do this. At the low end, PCB manufacturing is of slightly higher complexity than screen printing T-shirts--you can do it in your garage, and many Chinese manufacturers are roughly on this level. At the high end, where you're fabbing and assembling space-rated ceramic-core PCBs for satellites, that's being done here. As for making chips, yes, a lot of those are being made offshore now, but Intel and others still have very large foundries here, typically for their most-advanced processes.

"Are the ChiComms not intelligent enough to make similar advances?"

An excellent and fascinating question. China has always had a large population of extremely smart individuals. However, what we see is that a turbine blade is not the product of an individual but of a culture. The complexity and sensitivity of the processes needed, from the manufacture of the superalloys to the machining processes and especially the quality controls throughout, are much more than IP. First-world manufacturing is based on enormously complex and long supply chains, all of which rely on financial and legal systems with transparent and fair rules.

The big question for me isn't whether China can eventually work out how to do what GE and Rolls-Royce are doing today--they will--but whether in twenty or thirty years' time we will have moved on as well. I think the example of fracking should give us some cause for optimism, albeit cautious.

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The Snob
on September 13, 2019 at 16:10:50 pm


Agreed. I worked in this industry for 30+ years and have seen what has become of it BUT we still are *capable* of advanced manufacturing.
The question is "Will those capabilities be further eroded by "financial" factors such as the lack of "innovation / implementation" venture capital as I have previously alluded (and to which Mr Goldman concurs). There are a host of other financial / regulatory factors affecting our ability / capability.

This is my chief concern not the number of PCB fab houses, the manufacture of which is, in certain circumstances with which I have experience, somewhat more involved than the typical screen printing process (see defense department requirements for certain PCB types) as well as the downstrean processing of both the PCB and its' highly sensitive components.
In any event, I suspect we are in substantial agreement.

And yep, the Chicomms ain't no dummies and excel at STEM. What will further propel them forward would be a situation not unlike that present in18th & 19th century England where the sheer mass of "innovative" knowledge and its associated technical / process skills and personnel were able to apply the new discoveries across industries.

We are failing at this while at the same time destroying a previously important segment of the middle class.

take care
I enjoyed the chat.

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on September 13, 2019 at 16:14:31 pm

And finally there is THIS: (I could not resist).


Here is something else WE are up against. Yes, let us have our military forces forego the use of fossil fuels in order to recruit "environmentally aware" soldiers.
That will work out well, now won't it?

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Image of gabe
on September 14, 2019 at 15:17:39 pm

At least one reader gets the reality of the Communist party in modern China (point 3 above). Mr. Goldman says he's "never met a dedicated Communist" in all his contacts with Chinese officials. I have bad news for Goldman: that's all he's met in his contacts with Chinese officials, they're just trained to hide it very well in their interactions with westerners. You don't get to be an official in China today unless you're a dedicated Communist; that's how the Communist system works. That's why what's happening in Hong Kong today is happening today; that's why what happened in Tien An Mein square 30 years ago happened then. It's what dedicated Communists do, follow the dedicated Communist playbook in all things at all times. Mr Goldman has allowed himself to be hoodwinked; I sure hope the rest of us don't.

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Image of Ted
on September 15, 2019 at 18:45:58 pm

As an American engineer and white midwestern resident dissent, I welcome our new Chinese overlords, and welcome them smiting wall street and dc.
At least the Chinese respect competence and performance, unlike American corps that hire for diversity points.

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Image of American dissident
American dissident
on September 21, 2019 at 19:50:25 pm

But in your penultimate sentence you've revealed the plan of the straw-banners: Their restrictive actions against free choice are mental conditioning for a future world where choices no longer exist. In other words, they've bought in on the ground floor and are promoting the position to maximize the future value of their investment.

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Image of Buzz Ricksens
Buzz Ricksens
on September 27, 2019 at 02:11:22 am

Yes, my friends here in Qualcomm land (San Diego) who’ve worked on 3G-4G-5G tell me how amazed they were at how seemingly overnight Huawei became the player- here, in Mexico, in Sweden, etc.; but it was a well thought out long-term plan of course.

Meanwhile last week I gave a presentation to 30 Chinese school principals visiting to study models of STEM project-based learning. They are trying everything to go from “fast followers” to “first innovators”— from Mandarin test takers to inventors and who-cares-what-anyone-thinks visionaries. I have visited many of their elite schools, and I would say they have a long way to go; but they understand the problem.

But the same crew that gave our manufacturing base to China and engineered the “greatest technology transfer in history” (the geniuses that paid software coders in India $9/hour to work on Boeing cockpit software) has also destroyed our greatest hope for producing more innovative STEM graduates in the US (giving our kids the best of both worlds: world-class/Chinese style competence AND American style curiosity, confidence, and creativity): the Charter Schools movement.

The original charter legislation was designed to increase parent choice, provide alternatives for impoverished communities with failing schools, and encourage competitive innovation— with the best schools becoming models for other charters or even district schools.

It worked for a while, educator-runs schools blossomed and so did innovation — but the rent seekers saw they could make a lot of money owning the real estate under Charter Schools and taking away control from educators (using new market tax credits and helping finance their real estate purchases by selling EB-5 bonds to… the Chinese!).

Now for every “Success for All” charter org that actually gets good results there are ten third rate outfits that are run by private equity investors hiding behind shell companies AND five over-hyped outfits like KIPP run by MBAs and marketers hired by the billionaire-funded non-profits — both sets of incompetents cover over or ignore their poor test results (if you only have time to look at one score, look at Algebra; a school that can’t teach algebra, can’t teach anything), protect their brand against all any information that might hurt it, claim to get “all children into college” (but don’t say what happens after they get there), have over 50% yearly teacher turnover rate, pay far above market rent and enter into high interest bond deals that fleece the public, etc. A double betrayal of their country!

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Image of Tedward
on December 27, 2019 at 06:02:05 am

[…] We Need Our Mojo Back Vis-à-Vis China, by David P. […]

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