The PRC motto is not about "can do", it's about "able to do". Can Palau build a commercial airliner when Boeing and Airbus workforce is 10x their population? No that's simply out of their reach.
That's really the crux behind the original statement, there are not many (really currently any) country in the world other than PRC who has the complete industrial chains and workforce numbers to build anything that already exist if they pour enough resources into it. They're the only country whose manufacturing sector has every industrial category classified by UN. That's the context behind the quote (directed at domestic doubters), every other country in the world has to pick and choose what to specialize in, PRC doesn't, so as long as item is not made by god, PRC can figure out how to build it.
The geopolitical reality today (i.e. the amount aggregate S&T complexity that has accumulated from past 100 years) is there may not be anything others can build that PRC eventually can't due to size of PRC talent and industrial base, the reverse is not necessarily true. There's a shit load of advanced industries that are simply out of most small/medium even large countries reach because their size precludes them from coordinating enough people or industrial resources for undertaking.
> The PRC motto is not about "can do", it's about "able to do".
Who cares? "Can do" assumes "able to do".
> Can Palau build a commercial airliner when Boeing and Airbus workforce is 10x their population? No that's simply out of their reach.
That's why I limited it to : "That's how everyone who industrialized/advanced approaches everything.".
> That's really the crux behind the original statement, there are not many (really currently any) country in the world other than PRC who has the complete industrial chains and workforce numbers to build anything that already exist if they pour enough resources into it.
China is a subset of the american world order. The PRC's industrialization is a creation of the US/Japan/EU.
> PRC can figure out how to build it.
So can the US. Are you saying china can create something we can't figure out?
> The geopolitical reality today (i.e. the amount aggregate S&T complexity that has accumulated from past 100 years) is there may not be anything others can build that PRC eventually can't due to size of PRC talent and industrial base, the reverse is not necessarily true
I'd say there is nothing that china cannot build.
> There's a shit load of advanced industries that are simply out of most small/medium even large countries reach because their size precludes them from coordinating enough people or industrial resources for undertaking.
That just means small/medium countries will collaborate.
FYI: China is smaller than the west. China is much smaller than the west and its allies combined. There is no denying china has some advantages. But china also has disadvantages. Linguistically, politically, culturally, geographically, historically, etc. China's industrialization, just like japan's industrialization, was predicated entirely on western knowledge/tech and access to western trade routes.
Can do, does not in fact translate to able to do, for advanced/industrialized economies. It takes about 150k workforce to build long body civil aviation industry. US as country can muster that critical mass. EU has to muster that as a bloc (as you recognized). Developed economy <200m pop without bloc can't. That precludes most of the world. 50 years ago, there was less complexity, and many more smaller players "can do" their way to long body civil aviation, now they can't, they are not "able to do", the scale has grown and those smaller economies don't even approach/"can do" in the first place.
>So can the US. Are you saying china can create something we can't figure out?
>small/medium countries will collaborate
US has projected technical talent shortage in semi in 100,000s. Hence US only try to reshore fabs vs PRC semi brrrting talent to execute industrial policy to indigenize entire semi supply chain i.e. it's something US maybe can figure out, but can't execute, again not able to do on it's own, so it doesn't even try. That's really the crux behind original quote, EUV is made by people... but the broader context is EUV (and supply chains) is made by consortium of countries, i.e. common rhetoric is EUV is made by the world, how can PRC replicate global effort? The answer is EUV is made by a small handful of countries with fraction of PRC population, PRC talent pool and industry large enough to single hand speed run global coordination. Hence PRC is able to do everything, even things that require others to do as bloc.
>China is a subset
>predicated entirely on western knowledge/tech
>I'd say there is nothing that china cannot build.
Was a subsect. Now much of their dependencies are gone. That dependency made clear by export controls is why many PRC industry doubters existed 5-10 years ago who definitely thought there were things China could not replicate, EUV supply chain is one of these. The other is a competent national football team. But domestic industrial chain and talent generation has expanded so much so fast that much of doubt gone. The motto, was specifically made in this context. PRC techno-optimist look at all the other concurrent major indigenization projects and the underlying meaning morphed to PRC can build not just what another country can build, what another bloc can build, but everything... simultaneously, i.e. post war US hyper hegemony type of sole player. It is not your generic can do attitude, it's can do anything, and everything at the same time. Continental scale, industrial sovereignty/autarky tier of ambition.
>smaller than the west and its allies
It's roughly the same size by pop, unless you through in 3rd party India then when might as well as through in global south for PRC. But if we're talking about useful indicators, PRC produce more talent i.e. about same as OECD which is more than US+co. Industrially, PRC produce as much as core US+co block, US+co produce more by value add. Both are flow measures. But if we look in raw output / actual material production / output, PRC can be substantially larger than west combined. Many raw inputs (ree steel aluminum etc) small intermediate goods PRC make more than RoW combined. The exception is of course the pinnacle that PRC hasn't figured out, thrown industrial printing press at. But things like auto, spacelaunch, semi, civil aviation can go the way of PRC shipbuilding, one of the mature strategic industries where PRC now produces more than RoW combined.
Long term is after you and I die, before that they'll reap the greatest high skill demographic dividend in human history that can put everyone else in a bad place long term first.
It's the story the new generations tell themselves that's taken hold last few years. IIRC context is SMEE chairman (maker of PRC litho machine) said EUV is made by man, not god. Became rally for PRC industry and national confidence. X is made by man, not god for anything PRC needs to catchup on. Which circles back to Qian Xuesen, foreign people can build rockets, why can't we. Or more recently, foreign people are good at XYZ events, why can't we. AKA anything they can do we can do.
The bigger undercurrent is divide between faction of people who think EUV impossible or possible. Between boomer/doomers (older, never do better than west types) and young techno-optimists, faction generation/education divided. TLDR PRC technical talent skews young, and techwar as spurned wave of scifi optimists, techno nationalists and industrialist party way of thinking. It's not homogeneous but it's dominant, especially in S&T after quick ascendancy.
Diversity is just short hand for US needs to brain drain from around the world, the success is system that disproportionaly increase size of US skilled workforce vs rest, so people better play nice with each other (worked well until not). When PRC went from making 1% of of global technical talent to 50%, and able to retain them or in this case redrain them, they win talent game for generations (at least until 2070s). They will output more stem in next 20 years than US will increase population, births + immigration, i.e. their technical workforce will be 2-3x US. "Diversity" can't brain drain enough to make a dent on those ratios.
Nowhere close, but pace now seems faster than estimated, i.e. original western estimate is they won't even get EUV prototype up until 2030s.
Right now their chips are already "economically" competitive, as in SMIC is starving on 20% margins vs ASML/TSMC/NVIDIA getting gluttonous on 50-70%, at least for enterprise AI. Current scarcity pricing = litho costs borderline rounding error, 1500 Nvidia chip flips for 30000, 6000 huawei chip flips for 20000. The problem is really # of tools access and throughput. They can only bring in so many expensive ASML machines, including smuggling, which caps how much wafers they can afford to toss at low yield. They figure out domestic DUV to 2000 series and throughput is solved.
Hence IMO people sleeping on Huawei 9030 on 5nm DUV SAQP, still using ASML DUV for high overlay requirement processes, domestic DUV to fill rest. But once they figure out SAQP overlay, which will come before EUV, they're "set". For cost a 300m-400m ASML EUV, PRC can brrrt tools at BOM / cost plus margin. Think 40 domestic DUVs and associated infra for price of one ASML EUV to run 8x lines with 30% yield and still build 2x more chips normalized for compute that they can run on cheap local energy to match operating costs. Then they have export shenanigans like bundle 5nm chips with renewable energy projects and all of sudden PRC data center + energy combo deals might be globally competitive with 3/2nm. Deal with our shitter chips for now, once they deprecate we give you something better when our processes narrows gap, and you have bonus power to boot because some jurisdictions, building grid is harder than building fabs.
How does one even smuggle an ASML machine? I'd assume the machine stops working if the GPS position doesn't compute, at end of life I wouldn't expect ASML to allow these devices nor their components to end up on the second hand market, I'd expect the future transfers to require continued permission of ASML, much like weapons distribution.
The machines live indoors, far from being able to see GPS signals. Sure, you could require that there be an antenna run to the roof, but you can spoof that stuff.
The thing that helps prevent smuggling of ASML machines is that a) there are few of them (i.e., people would notice), b) it requires tremendous effort to move them at all, let alone without anyone noticing.
Considering that these tools are installed in seismically active areas [0], the last thing a customer would want is for the tool to zeroise itself because of an earthquake.
These machines are not like John Deere tractors. If you own the hardware, you own it. They won't be connected to internet. Security first!
Smuggling part is happening on the old machines before EUV. There's a lot of them available on the second hand market thanks to Europe and US keep shutting down their old fabs. I don't think any DUV machine is smuggled. Even if they physically smuggled one, you need a team of ASML engineers to set it up and calibrate. You can guess what ASML will do in this case.
By the way, let's don't forget: ASML doesn't have any problems with China. They are incredibly annoyed with US and Dutch governments. This is potentially the biggest market they are missing out. Even then, they won't tolerate a summugling operation.
Yeah PRC probably going to dump 1T into indigenize semi efforts by end of decade, but IMO good chance they're going to treat strategic semi as commodity utility business than make NASDAQ lines go up model. When western semi has 1st tier suppliers taking 30% margin, asml taking 50%, tsmc taking 50%, nvidia taking lol 70%, there's alot of fat on the pyramid to trim. PRC doing cost plus 10-20% will basically be able to brrrt chips stupid cheap if they have mature domestic tool scaling, enough to wipe litho+yield inefficiencies.
Western semi still "safe" since west+co aren't going to source from PRC leading edge due to national security, but pretty soon they're either going to need to compress margins to compete which means cutting costs, which means cutting R&D because shareholder going to get theirs or western semi business model going to run on permenant subsidies. Which is what will probably happen considering their performance is why stonk lines go up right now. That 1T PRC spend and choose to simply discount for utility chips is going to wipe multipel trillion of western semi market cap and all the economic implications that entails so it might not even be bad idea.
The NASDAQ line go up model is why the AI boom is happening and a major factor in why it is Western companies leading the charge. The more bigger issue is that the west refused to sell chips to China so they had to figure out how to make their own. And margin compression is what free markets do. That is one of the big motivators to putting free markets everywhere, the freer the market the more compressed the margins become. All the people working hard at crappy jobs start working hard at high paying jobs instead until the competition drives the money out of the sector.
There is a theme in the industries China does well in - western regulators ban cut-throat competition, China competes very hard and wins. The situation at scale is pretty straightforward. Usually it is environmental or labour policy, so this case of the root cause being sanctions is a bit unusual. But, once again, how Nvidia is meant to compete in China when their best products can't be sold there?
Free markets suppose to compress margins, perfect market theoretically drive profits down to zero (aka involution). But you compress margin and you lose current western semi business model that is functionally monopoly suppliers/producers who can sustain 50%+ margins to keep their monopoly. Shed those margins down to 20% because competitor enters market, harder to fund R&D to keep lead, it's still "enough" to be profitable, but then western commercial companies have to think harder how to split that compressed margin between investors and R&D. Right now we know what this leads to. Investors get paid, companies beg for subsidies. Not that PRC companies aren't concerned, look at PRC stock capitlization, not nearly to the same degree.
I poorly paraphrased profits converge to zero under perfect competitive market. Yes real world not perfect competitive markets. Oligor/duo/monopolies form, sometimes subsidies other shenanigans pick winner(s), winners extract huge margins/rents to build moats lock out new competition. Sometimes they collude / settle on business model with higher margins, i.e. 10-20% being normal/commodity, 50% for software and semi is top end of luxury goods. New state backed competitor enters and decides they can live on 10% margin, and then incumbants business model falls apart unless state also steps in to match.
E: And state can, but I don't know if state generally willing/able to backstop companies to 50% margin long term. I can't think of any, maybe some major state oil. Nvidia/TSMC with $$$ margins getting some CHIPs injection really meant for bailing out broke ass Intel was already anomalous, and it was basically to bribe them to onshore production.
Note "converging to zero" doesn't really mean zero because economics includes opportunity costs. It just means that outsized gains don't exist over the longer term without some kind of market power. In the long run, most industries end up making the same returns.
I've found that this does not match reality. People have strong beliefs in value of specific things, even when that value is not economically there. The value of software is indeed zero, which seems to make people value hiring software engineers greatly over paying for software, and, tbh, that makes approximately zero sense in a lot of cases. The value of medical care is high, even when it's not (meaning there is plenty of medical and "medical" products that don't have real value). The value of houses is high and absolutely certain. Thinks like certain brands (even when the company behind them has disappeared), most obviously of watches.
This tends towards the economic reality but it certainly does not match it.
Except the market pretty much can't do this with Nvidia. Nobody is showing any sign of catching up: it is entirely possible we are seeing a runaway train and without the intervention of a massive state like China to create a viable competitor, there will never be one.
This situation has been going on for 5 years now. It's ridiculous to assume there will never be competition. You. could have said the same about Intel a couple of decades ago.
> There is a theme in the industries China does well in - western regulators ban cut-throat competition,
The problem is not regulation, it is the lack of it: anti-monopolist practices and deregulation of the finance industry has led us to insane bubbles, dead markets and extreme wealth concentration. Any competition gets bought, crushed, or undercut via bankrolling. This is what you get when the 0.0001% gets to pull the strings again. Must watch (3 parts): https://www.arte.tv/en/videos/103517-001-A/capitalism-in-ame...
They flood an industry with funds and let them all compete with each other. Then they back the biggest winner. A command economy usually mandates X units of Y good. This isn’t quite that.
Its a pretty big detriment to American thinking that they take cold-war era characterizations of the Russian economy and then apply them to 2025 China.
The current Chinese worries are about having too much competition rather than too little, Google "involution" to read about it.
I am talking about the economy in the Western model, it works well if there is competition. And it usually needs the state to do moonshots, like the literal moon shot or Silicon Valley. But the American economy was the most impressive during the Roosevelt years. The war production was insane, with 75% state planned, state built and state owned factories. The private sector was dominated by oligarchy owned monopolies, which means it wasn't impressive¹. The government had no time for conservative fairy tales and needed to take initiative.
What helped was the public outrage over the insane profits the American oligarchs reaped during WOI. This enabled Roosevelt during WOII to set a maximum profit margin for the oligarchy owned factories and fined those who evaded the law. It was a shock for the conservatives to see how the bureaucracy turned America's mediocre output around with a fast, efficient and lean production monster. The monopolists had to resort to propaganda, claiming the government's success as theirs, injecting the falsehoods we now all take for granted.
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1. As an exercise, think what would be possible if all the cash piles didn't sit at big tech, but instead enabled competition. Meta isn't still more than a useless addiction factory.
Your analysis is out of date I think. This has already happened. Poor NXP just got their asses handed to them by the PRC. The fab they have in Italy looks nice but PRC has many of those.
Also Texas Instruments, STMicro, Onsemi, Microchip Tech, i.e. what PRC is doing after going big in mature nodes last few years they likely will also do in leading edge. IMO there's argument that since leading edge will definitely be strategically bifurcated PRC and western semi can pseudo collude to maintain higher margins, especially if PRC wants to claw back investment. But if western semi continues to drive economy/growth there's also incentive to weaponize margins.
Most of that entire network is easy to replicate, as in it's not technically hard, the hard part is validation, no one in PRC wants to use unproven PRC inputs if risk is 100m wafer run goes to trash. Hence PRC now basically insuring domestic fabs on risk runs using domestic inputs, which are being validated on full scale production, instead of taking 5 years to verify, it'll take 2. Export controls help this, i.e. domestic resist basically required now after JP export controls.
The hard part, i.e. optics, light source. Zeiss had like 3k engineerings, Cymer 1k, ASML 13k during EUV commercialization process. PRC can (and is) just throwing bodies at problem, lots of parallel execution with clear second mover road map. That and as this article suggest, they're literally poaching people with the tacit knowledge which will help speed run. I'd wadger they get there sooner than later.
Well real question is how much would that limit PRC talent from working abroad. PRC will be producing plurality of STEM / high skilled talent for decades. They're going to be the only country with project intergrated circuit talent glut in next 10 years, every other semi power projected to have 100,000s shortage. No PRC talent, and you cap western semi talent pool.
Ultimately a lot western innovation run on brain drained PRC talent. There is bamboo ceiling in western tech for east asians, specifically to restrict reverse knowledge transfer. Side effect is once PRC talent hits this ceiling they know big title and fat paychecks and upward mobility is back home, where frankly QoL is off the charts. Ultimately PRC wealthy enough to reverse brain drain aka brain recirculation and PRC talent aren't retarded enough to limit their career aspirations because west decides to cap their career trajectory and try to lock their future behind noncompetes, especially in cold war vs their birth country. Worse, PRC wealthy enough even if there's no bamboo ceiling they can afford to reverse brain drain top 1%, hence current equilibirum. West needs PRC talent, west cannot afford PRC talent to climb too high, PRC can afford to take them off west's hands.
Until west figures out another source of talent, they're stuck in this talent trap. And IMO India ain't it, they don't have the integrated industrial chains and academic structure to produce same kind industrial ready workers yet.
Your point is right on. And additionally, why would an average Indian refuse the pay package to work in China? The top r&d guy at SMIC is from Taiwan after all. Liang got both Samsung and SMIC into the advanced nodes.
High skill demographics. PRC is going mint more STEM in next 20 years than US is set to increase population, all sources total. That's more or less locked in from past 20 years of births. In relative terms, PRC is going to have OCED combined in just STEM, excluding all the other technical skilled workforce. It's the greatest high skill demographic divident in recorded history, in country with superstructure to allocate talent. All the rapid catchup PRC made in last 10 years was built on fraction of highend human capita they will have.
That PRC talent cohort are going to stick around 2060/70/80s. Past that, it's hard to extrapolate, but ~50 years with that much talent advantage can build very durable advantages. Meanwhile the population PRC sheds is overwhelmingly going to be the old, undereducated etc, think 200m rural farmers left behind by modernization that bluntly is net drag on economy/system, but they're also relatively cheap to caretake vs US silver obligations.
Short of AGI, US is not a serious competitor vs PRC in terms of skilled demographics that sustains strategic hegemonic advantages, at least not in our lifetimes.
But that's just a function of their large population size.
Even if you wanted to, you cannot bring the majority of your population to a high-skill level.
That's not surprising, but still it is debatable whether China is producing value in line with their large, highly skilled cohort. They seem to be stuck on the hard problem, relying a lot on the import of foreign-invented technologies.
That may change over time; we will see…
Yes, the entire point is their population denominator so large that, past 20 years of birth + ongoing shit tier TFR still gives them incredible technical talent generation advantage now that they sorted out tertiary and industry pipeline. They don't need majority of their pop to be high skilled, and it's not, we're simply talking about PRC workforce upgrading from 20% -> 30%/40% skilled workforce vs OCED already maxing out at 50%+, that ~30% PRC skilled already exceeds entire US workforce. PRC relatively shit TFR still gives them absolute and relative global talent advantage.
Skilled job supply: labour supply is definitely issue, and there is theoretical ceilling on how much high skilled technical jobs there can be. But PRC only country with talent glut, vs everyone else projected shortage. That automatically gives them both strategic and economic advantage (unlimited cheap high end labour). And part of the shortage (i.e. source of youth unemployment) is simply they spammed academia harder than industry. real estate to industry pivot lagged academia machine going brrrt by 10 years. Industry is going brrrt now, but will still take time to generate 10s of millions of high end jobs, which btw will simultaenously erode western high end. Every industry where western incumbants gets displaced by more efficient PRC players basically lose significant portion of their operating profits and downsize.
>be stuck on the hard problem
They are manifestly not. They have been brutally accelerating / demolishing / catching up / and recently leading. Look at actual timeline, bulk of tertiary talent generation is post 2000s academic reforms (add 10-15year masters+industry pipeline), they didn't explode academic system and talent output until ~2010s, bulk of new talent + a few years for cohorts to integrate into and simultaneously expanding high end industry = almost all the high end catchup was done in the last 10 years shortly after workforce composition STARTED STEM/skilled shift. And most of that catch was done when PRC was growing from 20m-40m STEM, i.e. from half US STEM to parity, and exploding before it reached parity due to PRC industry cluster advantages.
Like the amount of progress/catchup they have made across every sector relative to execution time is objectively stupendendous, as in historic outlier tier, and now they're leading/frontier in various sectors, which already invalids they can only fast follow. They're simply not retarded with industrial policy until coldwar 2.0 that forced them to decide to indigenize everything and that was 7 years ago, they're pretty much caught up in nearly everything except the absolute pinacle, and even then they seem to be beating western projected catchup timeline (see today's Chinese EUV prototype report).
This all happened in basically 10 years, when PRC cultivated pool for mid-career professionsals in 2010s from 2000s tertiary reforms. They will have conservatively 50 years and 2x-3x larger skilled workforce and much larger/developed industrial base going forward, i.e. OCED combined, but not paper workforce, workforce with actual access to the densest and most complete industrial chain in the world brrrting at PRC speed.
IMO this is talent/industrial base advantage that is as insurmountable as US WW2 advantage that sealed US hegemony for 50+ years. Like even if US AGIs first cope strategy is true, LBH, said AGI is going to look at the numbers, the industrial chain density, the sheer abundance of power and abillity to generate atoms, and immediately defect to PRC.
Thousand talent tier incentive is drop in the bucket, most sea turtles return because only so high you can climb in US with cold war bamboo ceiling. Past certain point, both US PRC can cut big checks, PRC lets a yellow face climb to top.
South Asian (Indian) / White / East Asian ceo gap something like 3 / 2 / 0.5 per million pop in US. Chinese long recognized this ceiling, and more are returning to PRC because of it. More and more, PRC getting Chinese returnees that are credentialled 40yro stuck at manager / director level who see greener PRC grass leaving after accumulating industry knowledge / experience taking their entire network / ip / tacit knowledge with them. PRC use to pay a lot of recruit these folks, but we're at that point a lot of Chinese Americans from 80s-90s are in their 30s-40s, who know how high they can climb in US. Meanwhile PRC printing highend jobs that attract Chinese talent with comparable compensation, and a better title / social status.
CEO gap mostly goes away when controlling for pop. age / cultural differences (less assertive), not nebulous racism like first comment. PRC still pays a lot to recruit through 1000 talents, USDOJ continues to uncover cases where $X00,000+ offered for IP / research. Meanwhile Chinese (m|b)illionaires make exit plans in case they get Jack Ma’d or worse.
Yes, yes and Asian tertiary applicants has worse personality except not. Eitherway, I didn't bring up racism. I said Chinese want leadership positions, they're not getting it vs the usual other races in US, so some go where they can get it, which happens to be increasingly PRC.
X00,000 USD is... not a lot anymore. That's normal compensation for high tier jobs, aka PRC tier1 opportunities is simply default globally competitive especially when you factor in other allowances. Top tier 1000 talent tier inducements where PRC build you a lab, give 7 digit in guaranteed funding, aka exactly the kind of opportunities bamboo ceiling is cutting off in US is pretty rare, almost rounding error in overall flow of talent. NVM DoJ has prosecuted ~0/150 thousand talent cases for actual espionage, i.e. never uncovered anything but candidates double dipping on PRC and NIH/NSF grants.
I don't know what billionaires capita flighting fraction of their liquidity has to do with anything. Ultimately whats more damaging for geopolitical S&T competition, capital flight, or knowledge flight.
That's really the crux behind the original statement, there are not many (really currently any) country in the world other than PRC who has the complete industrial chains and workforce numbers to build anything that already exist if they pour enough resources into it. They're the only country whose manufacturing sector has every industrial category classified by UN. That's the context behind the quote (directed at domestic doubters), every other country in the world has to pick and choose what to specialize in, PRC doesn't, so as long as item is not made by god, PRC can figure out how to build it.
The geopolitical reality today (i.e. the amount aggregate S&T complexity that has accumulated from past 100 years) is there may not be anything others can build that PRC eventually can't due to size of PRC talent and industrial base, the reverse is not necessarily true. There's a shit load of advanced industries that are simply out of most small/medium even large countries reach because their size precludes them from coordinating enough people or industrial resources for undertaking.
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