America's sanction idiocy
Huang Jiyuan

Editor's Note: The United States have been pulling out all the stops in protecting its power and position by trying to kneecap China's technological advances. But what exactly has it achieved? Has it been successful? This episode of Reality Check provides the answer.

Charlie Munger, the Vice Chairman of Berkshire Hathaway, recently said: "Think of what Apple has done by engaging in a partnership with China as a big supplier. It's been good for Apple and good for China. That's the kind of business we ought to be doing with China." He emphasized that "Everything that increases the tension between the two companies (countries) is stupid, stupid, stupid."

Yeah, that guy hit the nail on the head.

Hey guys, welcome to Reality Check. I'm Huang Jiyuan. The United States pulls out all the stops in protecting its power and position by kneecapping China's technological advances. Old news by now.

Reportedly, its latest trick will involve "unprecedented" rules limiting American investments in China, requiring companies to notify the U.S. government of new investments in Chinese tech firms and ban deals in sectors deemed critical, like microchips.

Bill Gates said it won't work. In a recent interview with the Financial Times, he said he doesn't think the U.S. will "ever be successful at preventing China from having great chips." The U.S. is basically forcing China to spend time and a lot of money to make their own chips and China is "at scale to catch up fairly quickly."

It's happening. 

Between 2012 and 2022, China's number of R&D personnel, high-tech companies and high-tech zones have all risen substantially.  

In 2022, China's gross domestic expenditure on R&D reached more than three trillion yuan ($449 billion), surpassing the 3 trillion milestone for the first time. It's the world's second-largest R&D spender.  

Based on Bloomberg's analysis, China's overtaking the U.S. in the number of supercomputers, and in the global share of high-impact AI papers. According to the Australian Strategic Policy Institute, China leads in 37 of the 44 technologies it tracked.  

Former Vice President of Huawei Technologies Simon Lacey said in an interview that "really, can you deny China this sort of technology in the long term? And if you deny it in the short term, then obviously won't it just develop that technology on its own in the long term? I really wonder what's sort of the endgame of the strategy is by American strategists."

Even U.S. companies are choosing to protect their business. 

The U.S.-based tech company Nvidia created variants of chips to get around U.S.'s export control for the Chinese market. Tencent estimated in April that even using the modified chips would cut the time to train its largest AI system from 11 days to four days.

Ineffectual policies, no reasonable endgame, little support in the business community but still politically determined to pick this fight. The same can be said for the debt ceiling crisis. That ugly fight is still ongoing after a century of the same play. If the U.S. defaults, it got no one to blame but itself.  

Letting politics burying logic and reasons, Like Munger said, is quite stupid.

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