One of my goals in keeping this blog is to track my thought processes and I particularly want to keep notes on any event or information that causes me to change my mind about issues.
I recently wrote about China’s position on the war between Russia and Ukraine. My argument was that it makes sense strategically for China to ensure Russia is not outright defeated, and that this might mean it chooses to support Russia more than it has up until now. While I am not renouncing that position, and I certainly think western analysts should be cautious not to assume that China is unwilling to give Russia greater support, an article by John Lanchester in the London Review of Books has given me pause for thought.
It concerns China’s ‘Sputnik moment’ (the phrase comes from Chris Miller, whose book is the subject of the article). The analogy being to the moment in 1957 when the Americans looked on in flabbergasted silence and realised they might not be the unchallenged technological superpower they had hoped. It turns out China, too, might not be as advanced in the technology race as many of us tend to think. For all the ink spilled about microchip wars in the popular press, I have failed to grasp the scale of the contest and why China might be severely disadvantaged in the global marketplace.
This is a story about tiny transistors. Few household appliances were dependent on these humble semiconductors at the end of the twentieth century, but now they are in every kitchen appliance and electronic piece of kit in enormous quantities. According to Lanchester’s article, the microchip in an iPhone contains nearly twelve billion transistors and a MacBook roughly twenty billion. That’s thirty-odd billion transistors in just two devices. They are in cars, toasters, hearing aids and much more besides.
China, as one might expect, has a large industry manufacturing microchips. It has advantages over western manufacturers because it can churn them out at low cost and in great numbers. Labour is relatively inexpensive and the Chinese government subsidises the factories. China can probably keep manufacturing the microchips needed for toasters and hearing aids autonomously.
But here’s the rub. China has limited capabilities in the manufacture of powerful, high-end microchips. It needs to import these en masse instead. Again, taking a figure from the article, China imported $260bn worth of microchips in 2017, which was more than it spent on oil imports.
It turns out that manufacture is limited to very few companies. Microchips may be manufactured widely, but the powerful ones are a feat of engineering beyond my imagination. The transistors in some of these microchips are smaller than the coronavirus, which is ‘about a hundred billionth of a metre across’ according to Lanchester. Now it becomes obvious how remarkable the machines used in their production must be.
The factories – called ‘fabs’ apparently, from fabrication plants – sound like something described in Brave New World. In my mind, I see the sterile Hatchery and Conditioning Centre of Huxley’s novel with its polished tubes and rows of precision instruments. Workers in the fabs wear hazmat suits and there is negative air pressure so that dust cannot contaminate the production process. Since China does not have fabs able to manufacture the high-end microchips, it relies on buying them from such companies as Samsung, Intel or the Taiwan Semiconductor Manufacturing Company (TSMC). Lanchester takes up the story:
‘In October 2022, with little notice before and not nearly enough attention afterwards… [the] Biden administration announced a ban on microchip exports to China, targeting both the US companies that deal with China, and any overseas companies that use US-made semiconductor technology. […] Trump talked a good game about trade war with China, but when it comes to intentionally damaging China’s strategic interest, nothing he did was within a country mile of Biden’s new policy.’
Other western states are gradually falling into line with Biden’s policy. Last week Japan announced new restrictions on sales of semiconductor manufacturing equipment. Part of the goal of these restrictions is to stop the Chinese military from making use of high-end microchips, though there are clearly far-reaching implications for the whole Chinese economy. I said above that China might be ‘disadvantaged in the global marketplace.’ I suppose the point, actually, is that the US is trying to manipulate the marketplace; it is not a matter of supply and demand so much as geopolitics.
At this point everything takes an additional and sinister turn in my mind. Note that one of the companies mentioned above, able to manufacture microchips with the tiny high-end transistors, is Taiwanese. TSMC only manufactures them, it does not design them, but that may not be the point. China’s ‘One China’ policy and its declared intention to use force if necessary for ‘reunification’ of mainland China with Taiwan suddenly takes on an urgent significance for China as it tries to stay in the technology race.
So, first of all, I am left wondering whether China is the technological powerhouse I imagined? Western leaders clearly worry about China a great deal of the time. Major stories like the furore round Huawei in recent years or the ‘spy balloon’ saga in February show this. Meanwhile, as I write this, France’s president, Emmanuel Macron, is headed out to Beijing on a state visit where he hopes to prevail upon Xi Jinping that Russia must withdraw its forces from Ukraine – reiterating that China is seen as a key player in the Russo-Ukraine war. Perhaps, however, western states have been more successful in curbing the rise of China’s economic and political power.
Secondly, while I still think that China’s long-term strategic interests dictate ensuring Russia avoids outright defeat, I am starting to think that China has more skin in the game than I have appreciated in the messy geopolitics of this ‘European’ war. I may have overestimated its ability to adapt to prospective western sanctions. Perhaps economic interests do matter more than strategic ones all the while China weighs up its options in respect of Taiwan. Of course, the Taiwan situation could develop rapidly at any time, but unless China already feels prepared to invade, then the lack of high-end microchips will impede considerably its military’s technological advances and, in turn, its capabilities.
China occupies something akin to a hegemonic position in respect of the rare earth metals which have wide application in many of the toys of modern living, from LCD or plasma screens to rechargeable batteries, and China has developed worrying technologies in AI and surveillance. I do not think those things can be dismissed out of hand. But it seems China is lagging behind, flailing, in being able to produce a tiny component so fundamental for all of these gadgets – and that is a big trouble in not-so-little China.
Image credit: Uberpenguin with the assistance of Matt Gibbs (matt[AT]alwayssleeping{dot}com) - Own work, CC BY-SA 2.5, https://commons.wikimedia.org/w/index.php?curid=1138982
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