September 20, 2022
China Hit Some Bumps on Its Road to Semiconductor Dominance
Don’t be lulled into thinking China is failing in its goal to become the world’s biggest semiconductor-chip producer. That’s the conclusion some are drawing from such troubles as the bankruptcy of national champion Tsinghua Unigroup and the high-profile arrests of several officials and executives. If China is failing, the argument goes, why is Washington launching an expensive industrial policy to subsidize domestic semiconductor manufacturing? This analysis is emblematic of the Western habit to underestimate the strength and resilience of China’s economy, political system and industrial strategies.
China’s statist approach suffers from endemic waste, misallocation of capital and corruption. China isn’t guaranteed to succeed simply because Beijing wants to.
But the notion that these arrests and bankruptcy signal China’s failure lacks evidence.
Consider the solar and shipbuilding industries. Similar to semiconductors, solar technology was invented and first commercialized in the U.S., only to be targeted later by China’s state planners. In 2012, after years of massive subsidies and overinvestment, China’s largest solar firms began to suffer high-profile setbacks. Trina and others cut production to maintain profitability. LDK Solar and others were bailed out by local governments while defaulting on foreign bonds. Suntech, the Nasdaq-listed darling of China’s solar sector, went bankrupt in 2013. Fast-forward to the present, however, and China’s solar industry is so dominant that U.S. and European green-energy goals depend on Chinese exports.
Read the full article from The Wall Street Journal.
More from CNAS
-
Next UN Afghanistan Talks in Doha Must Hold Taliban to Account on Human Rights
The United Nations is preparing to host its third meeting of international envoys to Afghanistan in Doha later this month. This is a promising initiative aimed at developing a...
By Lisa Curtis
-
Obama tried to pivot to Asia in 2011. We must succeed this time.
This article, originally published in The Washington Post, is an excerpt from Lost Decade: The US Pivot to Asia and the Rise of Chinese Power. In 2011, President Barack Obama ...
By Richard Fontaine & Robert Blackwill
-
How The U.S. Failed To Meet the China Challenge
It’s a rare subject of bipartisan agreement that China is the greatest strategic challenge facing the U.S., perhaps the greatest it has ever faced. And yet, despite a decade o...
By Richard Fontaine & Robert Blackwill
-
Addressing a Human Rights and Looming Terrorism Crisis in Afghanistan
Executive Summary Pursuing the same harsh policies as it did during its previous stint in power in the 1990s, the Taliban has increasingly clamped down on the rights of women...
By Lisa Curtis & Annie Pforzheimer