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
-
"No Question of U.S. Using India As A Cat's Paw Against China"
On 'Talking Point', Lisa Curtis, Senior Fellow and Director of the Indo-Pacific Security Programme at the Centre for a New American Security (CNAS) in Washington, D.C., Former...
By Lisa Curtis
-
Japan-South Korea Cooperation Amid Israel-Hamas Conflict Proves Benefits of Trilateral With US
Coordination on evacuations of their citizens from the Middle East is a seemingly small but symbolically significant step for Tokyo and Seoul....
By Evan Wright & Lt Col Jessica A. Guarini
-
How India-China Powerplay In Indo-Pacific Puts U.S. In A Fix
Former White House Official Lisa Curtis and Professor Minxin Pei decode the impact of changing global equilibrium on India-U.S. relations. Lisa Curtis believes that Chinese ag...
By Lisa Curtis
-
Indian Diplomacy: US Strategy in the Indo-Pacific
Discussion on the goals and strategies of the USA in the Indo-Pacific and the challenges in implementing them. Hosted by Dr. Sreeram Chaulia and featuring expert analysis by L...
By Lisa Curtis