Irregular Warfare Podcast - Inside the US-China Tech War

Episode Date: September 8, 2023

Be sure to visit the Irregular Warfare Initiative website to see all of the new articles, podcast episodes, and other content the IWI team is producing! Relations between the United States and China are characterized by growing competition and tension. This is true in a wide range of arenas, but particularly so when it comes to technology. US policy in recent years—from the move to keep companies such as Huawei out of US infrastructure to the CHIPS and Science Act enacted in 2022—is aimed at both preventing Chinese spying and containing China’s very ability to access high-end computing power. But where is US-China tech competition headed? In this episode—part of an episode swap with FP Live, produced by Foreign Policy—you’ll hear from Dan Wang, who explores that question along with Ravi Agrawal, Foreign Policy editor in chief. A visiting scholar at Yale Law School’s Paul Tsai China Center, Wang explains whether US regulatory measures are effective in actually curbing China’s ability to produce high-end semiconductor chips and proliferate its technology around the world. He also describes his pessimism about China’s long-term economic rise and his belief that the continued rapid pace of China’s technological development is not inevitable. Intro music: "Unsilenced" by Ketsa Outro music: "Launch" by Ketsa CC BY-NC-ND 4.0

Hi, I'm Ben Jebb, director of the Irregular Warfare podcast, and we wanted to share a special episode with you today. Our friends at Foreign Policy have a weekly podcast called FP Live, which we believe you'll enjoy. The show examines important trends in geopolitics, and today we'll be airing an FP Live episode that takes an in-depth look at the US-China tech war. Go ahead and take a listen. Hi, I'm Ravi Agrawal, Foreign Policy's Editor-in-Chief.

This is FP Live. Welcome to the show. It's fair to say that US-China relations aren't what they used to be. There are tensions in several arenas, and the most significant of those seems to be technology. A few years ago, Washington moved to keep companies such as Huawei out of U.S. infrastructure for fear of Beijing's ability to spy. Today, the issue isn't just about preventing spying, but containing China's very ability to access high-end computing. China's very ability to access high-end computing. Last year's Chips and Science Act was designed to cut off Beijing's access to the most advanced semiconductors. I've really come to believe that to understand US-China competition, whether it's tech or anything else, you first need to understand China itself. And there is no one better to read, watch, and listen to than Dan Wang. Dan's an analyst at Gavikal Dragonomics and a visiting scholar at Yale University.

And every year, he publishes an annual letter of reflections. These letters are part journalism, part philosophy, part analysis. But most of all, it's essential reading to try and understand the immense changes that China is undergoing in front of our eyes. We've linked his letters in the show notes. So how will competition between China and the United States on technology play out? Who will win? Why? As always, FP subscribers get to send in questions that frame these discussions. If you'd like to do that too, subscribe now. Use the code FPLIVE for a discount. You can also watch these interviews live in video if you go to foreignpolicy.com slash live. For now, let's dive in. Dan, thanks for joining us.

Thank you very much for the invitation, Ravi. So I'd like to start a few years back to give our audience some context. You've been living in China since 2017. And this is at a time when the Trump administration comes to power. It speaks tough about China. It starts placing more tariffs on Chinese businesses. FP viewers are quite familiar with the mood in the United States, which clearly became more hawkish in China and in a bipartisan manner. But tell us about the mood in China regarding the United States and how you've seen it evolve from that time, 2016, to around about 2020. When President Trump was first elected and entered the White House in 2017, I think a lot of Chinese viewed the

ascendance of Trump with the same mix of three emotions I'd like to point out. First, shock. Second, bemusement. And third, a little bit of dread. And I think as time went on through the years from 2017 onwards all the way until 2021, the sense of dread and shock, I think, grew more and more when perhaps other countries were able to stick with mostly bemusement. So a lot of Chinese felt a great sense of surprise at these escalating tariffs that the Trump administration imposed,

that the Trump administration sanctioned not just Huawei, as you were talking about, Ravi, but also many other Chinese technology champions. In fact, it's difficult to name many Chinese tech companies, whether that is Semiconductor, SMIC, WeChat of Tencent, ByteDance, Huawei, that did not suffer some form of a very novel US regulatory action against them. And I think in general, the mood among folks in Beijing from the leadership onwards, and I would say including the people, is just a less sense of happiness and goodwill and trust towards the United States. That I think the Chinese people are not getting quite all the fine distinctions that the US government officials are sometimes very good at promoting, that they have a campaign

against the Chinese Communist Party, that their disagreements are not with the Chinese people themselves. But when the Chinese people see this escalating rhetoric, especially from President Trump, who is not always the most careful speaker about, you know, her feelings, that people felt more and more a sense of being besieged by the US throughout the Trump years. by the US throughout the Trump years. And so then there's a big election, Trump loses, Biden becomes elected president, and then he sort of doubles down on many of Trump's China policies, if not the rhetoric. How does that get received in Beijing? Here is where I think there might be a little bit more of a difference between the people as well as the leadership. I think the leadership in Beijing were, I think, for the

most part, pretty prepared that, you know, after Trump, US foreign policy has become fairly consistent, and they did not expect the election of Biden to very substantially change relations to, you know, unwind a lot of these tariffs or regulatory actions that they've gotten used to. But perhaps the people were a little bit more expecting that, okay, you can kind of dismiss Trump as, put it not so politely, kind of a crazy guy who's in the White House. He says a lot of crazy things. But perhaps Biden, who comes from the party of President Obama, you know, maybe he will be a little bit of a better salve on the relationship. And that, in fact, has not happened. That, for the most part,

I would agree with your characterization that Biden, for the most part, escalated a lot of these technology measures. There are now more firms under US sanctions in terms of technology, and there might be other bigger, more novel forms of sanctions in terms of perhaps investment restrictions as well. So as the moods evolve on both sides of this relationship, I want to look a little bit at how technological changes then begin to take place. So the CHIPS Act takes place at the fall of 2022. It is aimed at not only boosting U.S. production of semiconductors, but also extremely limiting China's access to high-end chips. What impact does that have on China? have on China? The impact of the October regulations, which was a very substantial package limiting China's access, not just to the most high-end semiconductors, which could go into AI processing systems, as well as all sorts of other advanced technology business interests,

but it also limited China's access to the most sophisticated equipment to produce these types of semiconductors. So all sorts of the most advanced equipment is now for the most part off limits to China. And I think the Chinese companies are now trying to figure out the actual impact of all of these measures, because for the most part, it is still a little bit unclear about the extent that they are being affected. There are certainly things that Chinese companies are no longer really able to do quite as well, but perhaps that doesn't have a very substantial business impact. If I'm thinking about something like the next level AI, things like ChatGPT, these types of consumer products. Well, it's not as if most American companies have figured out a great way to monetize a

lot of these technologies yet. So these sort of measures are not yet really showing up in terms of company revenue. The other thing to keep in mind is that the stated goal of the US government, and I take them at their word on this, is that for the most part, they are trying to slow down China's ability to reach the upper echelons of AI processing. It is not, for the most part, to prevent their ability to make somewhat simpler semiconductors of the likes that go into washing machines or automotives that the bulk of semiconductors, for the most part, are still allowed to go into China. There were some substantial measures that limited China's

ability to access leading tools. There were some substantial measures that perhaps limits the ability of Chinese firms to hire American nationals, including green card holders, and that is quite shocking. But for the most part, I think the rest of the world is still trying to figure out how to work with these technologies. The Chinese have built a pretty large stockpile of the most advanced chips. When they could buy these types of equipment, there is still probably going to be some shipment issues in which chips that should not be going to China are in fact taking place because, you know, these small chips are not always the easiest things to track. And so I think it is still a little bit too soon to say that China is definitely feeling the impact from these measures, that these measures will probably bite over the next few years rather than the next few quarters. When the CHIPS Act

came into law, how worried were people within the Chinese tech community? In other words, you know, it's one thing to have US-China competition more broadly, you know, in a theoretical sense about two big countries competing on economics, competing for influence, competing over defense in the Indo-Pacific. But it strikes me that the tech sector is different because it has all these additional ripple effects for tech companies, for stock markets, for millions upon millions of engineers and product people. And then it has all these second order impacts on contractors and subcontractors at companies around the world.

So it really is just a huge move. And I'm curious how this was received within the Chinese tech community by people who work in China, people close to the party, etc. I think a lot of Chinese entrepreneurs felt a pretty immense sense of shock when they heard about a lot of these different types of restrictions. And I'm extending everything through to the Trump years, that when Trump and former US trade representative Robert Lighthizer complained about Chinese trade practices, they were mostly focused on state-owned enterprises, mostly focused on state-owned enterprises, that the Chinese economy was far too much driven by the state and the government, and less so about the types of entrepreneurial firms that are really

driving China's technological growth. But while the rhetoric of the Trump administration was focused on state-owned enterprises and state practices, the brunt of restrictions came on the Chinese entrepreneurial firms, firms like Huawei, firms like ByteDance, which owns TikTok and Douyin, and many other Chinese companies, which perhaps have some state involvement, but formally are some form of private enterprises with Chinese characteristics. And so a lot of these Chinese entrepreneurs, many of whom have been educated in the US, many of whom have worked in US firms or in the US, are now feeling that these are companies that really cannot be depended upon for business transactions that you never really know if an

American semiconductor that you've been buying for the last couple of years will now be cut off by a very secretive, very obscure body chaired by the US Department of Commerce that might cut off your access to advanced technologies at any time. Now, when it comes to something like the CHIPS Act, when it comes to the IRA, and as well as the big infrastructure bill, I think that from the Chinese government's perspective, really, there should be not too much of a sense of expressed surprise at a lot of these things. My view, a lot of what the CHIPS Act is doing pales in comparison to the mercantilism that has been driven by Beijing, that subsidies are really not that egregious of a practice. Perhaps there was some shock at the concept of putting some guardrails on US investment,

that in a US company that accepts these billions of dollars of federal subsidies, perhaps may not be allowed to invest anymore in the PRC. But for the most part, I think that the US is copying China's, a lot of China's practices, and at that still palely at, you know, what the most egregious things that Beijing has done before. Right, the irony of all the criticism of the Biden administration for adopting protectionism and for leading a subsidies race is that everyone's doing it. I mean, the Europeans have done it. China's ability to either produce high-end semiconductors, chips, or to proliferate its technology around the world. How effective are these measures? Is China able to find ways around it? Or does it mean that in cutting China off from the world when it comes to high-end semiconductors? We're incentivizing China to make immense investments in trying to catch up with the likes of, say, Taiwan or the

Netherlands. I think it is a fairly substantial restriction that the US government has crafted. But at the same time, it is still going to be a leaky sieve. The reality of it is that a lot of chips are produced en masse, that particular chips are not necessarily very well tracked, and that the Chinese entrepreneurs have a great incentive to be able to try to buy the highest-end GPUs for their most advanced AI systems. I saw a story in Reuters just yesterday about Huajiangbei, which is an electronics market in Shenzhen, which is certainly the hardware capital for China, if not the world, that a lot of these high-end NVIDIA GPU chips are being bid up twice their normal price because people are quite keen to get their hands on what is now a prohibited product. So some sort of

transshipment is taking place, some form of smuggling is taking place, and at the same time, I think what this is really incentivizing is that a lot of Chinese companies, which were world-leading companies, whether we think about something like Huawei, whether we think about something like ByteDance and Xiaomi, a lot of these companies, which previously had no time for buying Chinese domestic alternatives, they really wanted the best products in the world to be able to manufacture their own products in the world. They really had no time to buy a lot of Chinese technology, procure from Chinese technologies. Now they have been very strongly incentivized by the U.S. government to build up the domestic ecosystem. It is not because they are now much more loyal to Beijing's diktats. It is not because they are now much more loyal to Beijing's diktats. It is not because they are trying to prove their political credentials to President Xi Jinping. It is because bit split on the idea that U.S. sanctions, U.S. prohibitions have actually set back China's ability to innovate over the longer term. I think it is just as likely that in 10, 15 years from now, we will be able to see a Chinese technology ecosystem, which perhaps may not be quite flourishing. Perhaps it has not quite caught

up with Western chip makers in every single way, but it is strong enough to serve a lot of domestic needs. And I think that is quite possible because U.S. sanctions have made it so that the track record of U.S. sanctions in places like Cuba or places like Iran or North Korea have generally not toppled authoritarian regimes that has made a lot of domestic supply be about good enough, certainly not world leading, but about good enough to meet at least domestic needs. And I think that is a quite plausible scenario for China. And I think that is, you know, one of these impacts of US sanctions. So what I'm hearing from you there is that there's short-term pain, but not necessarily

much change in the longer-term trajectory. And I think where China is so different from, say, Iran or North Korea is just its size and its trajectory. And it seems to me what I'm hearing in your words is almost a sense of inevitability to China's rise and its ability to lead in high-tech areas. Is that right? I would certainly not call China's rise inevitable. I would certainly not call it a certain fact. In fact, I would say that for the most part, I am fairly pessimistic about China's long-term economic rise. And I think that is mostly the consensus view, that when you have all of these headwinds,

demography among them, a structural slowdown in real estate, because property is just not going to be driving so much more of Chinese economic growth. When you have quite a lot more regulatory decisions driven by so many of these unpredictable political decisions, when you have a state that is much more focused on driving state-owned enterprises at the expense of entrepreneurial firms, I think the broad view is that China is going to have a harder time, and I'm with that broader view. At the same time, when it comes to something like technology, what I would point out is that you can have, I think, broad slowdown

in economic growth. You can have structural slowdowns in economic growth. But at the same time, I think that doesn't prevent you from having a flourishing tech sector, because these things do not necessarily have to correlate perfectly with the broader economy. One of these very startling statistics is that China last year became a larger auto exporter than Germany because it has just mastered electric vehicles as well as the broader supply chain involving batteries when the rest of the world has been mostly flat footed on this

new technology, that a lot of Chinese auto exports are driven by foreign firms like Tesla. But still, I think it has been a quite remarkable achievement that China has set out to really master electric vehicles and arguably has succeeded very well. I would point out that you don't need a growing population to have an excellent semiconductor or really any other manufacturing sector, that you don't need millions and millions of people on these production lines. Perhaps a few hundred thousand people or perhaps a few million people is quite enough. You don't need a growing population to be able to succeed at a lot of these things. And so what I would keep in mind are two things. That certainly it is the case

that China's economy is in long-term slowdown. But second, I would say that a lot of technologies can be figured out by an economy that is still growing at 2%, 3%, 4%. That is still pretty good with a very well-educated population now that just has masses of engineers able to work on these sort of things,

that structural headwinds to the economy writ large does not have to defeat any particular technology sector. And you are listening to Foreign Policy Live. Remember, you can watch these conversations live on video on our website, foreignpolicy.com. Subscribers get to send us questions in advance that often frames these discussions. So sign up, use the code FPLIVE for a discount. So many subscriber questions today that I'm going to dive into a few of them,

especially because the first of them takes on a topic I wanted to bring up in more detail, and that's AI. So Jeff Bingham writes in to ask whether you think that, or whether you agree, that AI poses a serious threat from China, and if so, how? With AI, I confuse, I am fairly confused, and I have a pretty split mind about China's prowess in AI. I think it is certainly the case that China's leadership cares a lot about AI, that top leader Xi Jinping has held a lot of Politburo study decisions, Politburo study sessions on the topic of AI in particular, that they have released these AI guidelines. The most well-known one is from 2017, expressing a great desire to lead in AI.

At the same time, what can we actually observe from China's AI development? Well, the industry knows that China's AI capabilities and facial recognitions and surveillance are pretty world leading, but that answers a pretty clear political objective to have greater control over the people. for the most part, a forbidden product, that there is some usage of these sort of things, but it is fairly delimited, and that it is not given to the rest of the population writ large. And, you know, in my view, at least so far, China's leadership, I think, regards AI much as it does something, a technology like social media. We can travel a little bit back in time to the days of something like, let's say, 2008, Ravi, you know, we were hearing all these great tech platform claims that, you know, Facebook and Twitter are just going to connect the world, it is going to drive all of

these economic benefits. You know, I think we can now think that, you know, for the most part, social media has not really made us more economically productive. Has Twitter and TikTok been making us more economically productive? Well, I would argue that TikTok is making me far less productive. And so I think the Chinese government, which has long banned a lot of these social media companies from operating in the country, regards something like ChatGPT as much more of a company like social media platforms, which create political problems, but not that much tangible economic benefit. And so if you don't have a lot of these consumer uses feeding into the AI system writ large, does that set back China? I suspect it does somewhat. And so therefore, I want to be a little bit more agnostic

that China is a leading AI. We're just not really seeing a lot of these things yet. Perhaps that will all change soon. But right now, given their lack of chip access, given the lack of consumer behavior where one can learn from more of these uses, it doesn't look like it is a terribly compelling moment for China. And just an add-on question there, you know, there's been movement in Europe on trying to regulate AI, or at least coming up with frameworks within which to regulate AI. And usually, Europe is a leader when it comes to regulating any form of tech. America also is beginning conversations on that front. Where does China sort of ideologically sit when it comes to regulating something as new as AI? Do you think it is more likely to wait and watch and see how other countries handle it first?

Or would it be more likely to make some moves domestically for its own uses? So far, China has already released some AI regulations. And some of these phrases that the regulatory program uses are quite interesting and has provoked a lot of chatter that a lot of Chinese generative AI must serve socialist ends, which really make a lot of people scratch their heads. A lot of these systems are not very easy to control. Well, how is it going to advance socialist causes and socialist rhetoric? And so that has been something that is quite challenging. In general, China usually tends to wait for use cases before having regulation.

That was the case with China's tech industry, which was really freewheeling all the way up until something like 2018, 2019, when the government decided to rein it in. And I think for the most part now, China no longer waits for a technology to develop before regulating it. It is much closer in general to European standards of regulation. China has already imposed some sorts of restrictions, formal regulatory restrictions on AI development. And it is probably not very keen to see this technology proliferate before seeing what sort of controls it can impose. And I guess those controls have domestic impacts

as well, right? I know you've written about this before, about how open source research has driven global coverage of the Uyghur treatment in Xinjiang, other problematic aspects of China's governance. So there are trade-offs here as well as it pursues these kinds of technologies. So there are trade-offs here as well as it pursues these kinds of technologies. Yes, that's right. Absolutely. Let me take a few more subscriber questions. Kelly Stark asks, why is it in America's interest to limit China's technical progress? She goes on to say, many of China's scientists are very skilled and their advances in many fields can benefit all mankind,

why would cooperation or even competition rather than obstruction not be a better policy? Certainly, I agree with the sense that science is one of the best public goods one can imagine for an economist, that if, Chinese scientists are able to figure out some great breakthrough in, let's say, something like cancer research or nuclear fusion, I think that is quite good for the rest of the world. And these things are absolutely not out of the question that the Chinese are doing quite a lot of cancer research. They're doing quite a lot of energy research.

And of course, I agree with the sentiment that if the Chinese are able to make these sort of technology advancements, that is good for the rest of the world, including for America. I think if I had to defend a lot more the U.S. position, I would say that for the most part, the U.S. government has been pretty consistent in saying that this is about national security, that a lot of these advanced chips, when it comes to a lot of the advanced GPUs that make AI processing possible, well, these things may not necessarily go into missile systems. They may not necessarily go into particular missiles, but they are important for processing algorithms. And so semiconductors are an essential dual-use technology, which could be used for warfighting.

And I think that the US government states, and I certainly take their word for it, that they believe this view that a lot of technologies are dual use, that a lot of Chinese activities are nefarious, and there have to be some limits. Now, then, if I accept this premise, which I do, the question then is, to what extent can the US create the best sorts of limits, given that it believes that a lot of Chinese activities are nefarious. And I would say that a lot of US activities, especially during the Trump years, have been very significantly counterproductive, that a lot of the Trump administration's initiatives scrutinizing Chinese scientists or scientists of Chinese origin in US universities contributed to

kicking out a lot of very skilled scientists that could have been very significantly helping U.S. efforts in all sorts of things. But a lot of lives were ruined for very, you know, uninteresting, I think, research and propriety issues. So I think my view on this is that we can accept the US position that certain technologies are crucial for national security. Certain technologies are being abused in China for things that involve human rights violations. But then the question is what to do about it. And my view was that a lot of what the US government has done from the Trump administration, including some of the things that the Biden administration has done, will over the longer term accelerate China's self-sufficiency.

And at least when it comes to people-to-people exchanges, what the Trump administration has done has been terribly unproductive in driving a lot of professors and scientists out of U.S. universities into Chinese universities. Tim Reed, another subscriber, has a great follow-on question. And he says that you say that China's tech competitiveness is grounded in manufacturing capabilities, but there is abundant evidence of China's theft of Western technology in the past. And Canada's Nortel basically went out of business because of it. So his question is, how can the West confront this threat in practical terms without turning into a hostile, closed society? Yes. And that is a major

question. And I think that is a major dilemma. And I think there is no doubt that Chinese companies have engaged in trade secret misappropriation. They forced a lot of Western companies in order to do business in China into these joint ventures that have resulted in some forms of technology leakage. And that there has been a pretty clear evidence established in criminal court cases that China has engaged in cyber theft and has stolen quite a lot of technology secrets.

What I would try to do is to try to contextualize a lot of that a little bit, that I think it is undeniable that Chinese actors have done these pretty nefarious things. But at the same time, I think that China's technology progress has not been driven primarily on a lot of these nefarious activities, that China is at this point the second largest economy in the world, that it has a very large population, that a lot of its engineers have gone through a lot of training and a lot of education in order to get pretty good at what they do, that a lot of Western firms have entered the Chinese market very much willingly to be able to take advantage of its manufacturing and its labor costs,

that a lot of these firms, you know, very willingly trained up a lot of Chinese workers, as well as engineers to build the very best products in the world. And so I would say that, you know, China is not exactly predestined to become the world's technology leader, but I think it is predestined to become a major player in technology. And that China has advanced pretty nicely. It has figured out a lot of different industrial technologies. It has not mastered absolutely everything that when it comes to the most complex technologies that include examples like aviation or semiconductors. The Chinese are, in fact, pretty significantly behind.

There is no doubt that they engage in all sorts of nefarious practices. But at the same time, they have built a lot. They have built a lot through Western cooperation. They've built a lot because the domestic ecosystem is getting better and better trained, that they are engaged very much with selling to the rest of the world. And I think that China's rise, it would be far too simple to say that it was entirely driven by theft. I would say that for the most part, that was driven by what Chinese companies and Chinese

workers have been able to do. You know, while you were speaking, Dan, Gareth wrote in with a related question, and it goes like this. We've seen how some Chinese tech success stories, for example, he cites the Power Star CPU, are ultimately deceptions rather than real advancements. And so Gareth's wondering to what degree the perception of China's technological rise stems from real progress versus some smoke and mirrors. I think there is some smoke and mirrors for sure. But at the same

time, I think it is undeniable that China has made quite a lot of very significant tech advances, especially in the realm of energy. And so, you know, I think that the CHIPS Act, as well as the Inflation Reduction Act, cannot have been justified if the rest of the world really believed that most or all of Chinese tech progress is smoke and mirrors, that it is reacting to a very real threat in which the Chinese have mastered quite a lot of industrial goods, that the Chinese are not only assembling iPhone components, but are making some of the most sophisticated items in an iPhone as well. And that's when you could take a look at China's progress in clean technologies and technologies essential for the green transition. Chinese firms have been doing really well. They control something like 80% of the entire supply chain for solar technologies. They're building most of the world's wind turbines. They're building a lot of the world's electric vehicle batteries, which is why they

become such a large electric vehicle exporter. And when you take a look at segment by segment, when it comes to 5G technologies, when it comes to a lot of other types of electronics. The Chinese have been doing quite a lot. They have been very successful at it. They've certainly had pretty prominent failures in terms of semiconductors as well as aviation, in which they are years and years behind, and perhaps they will close the gap. But I think we cannot say that all of it is smoke and mirrors. Some of it, yes, for sure. But they have come into a pretty nice industrial segment where they are, I would say, arguably closing in on Japan and Germany on a lot of these different technologies. And what the US government

is really trying to react against is that they are not closing in on the U.S. prize industries of semiconductors and aviation. You know, Dan, I was struck by how you said earlier in this conversation that when the Trump administration was in power and imposed all these sanctions on China, and then the Biden administration continued on with them, that there was a general sense of shock among Chinese business people in the government. And it got me wondering, because here in the United States, there's so much talk in the foreign policy community about a recent shift from talking about decoupling with China

to instead de-risking, a more neutral word, I think. But do these terms and the nuances within them get translated in Chinese media? Is it something that you pick up on in conversations with people in the industry? There has been certainly state media pushback against the term of de-risking. But how exactly to translate de-risking is a little bit of a term of art, because I think that for most of the world, they are trying to translate the term de-risking to their own domestic audiences. I think the policy itself is still quite vague and uncertain. When we think about a term like de-risking, I have a colleague at Yale, Paul Gewirtz, who's pointed out that when you talk about a term like de-risking, it could mean

at the same time, reducing the amount of risk or eliminating the risk completely. So, you know, which is it? I think every country is going to have a different way of interpreting that word. And given these, you know, that there is a little bit of an ambiguity, perhaps even a contradiction in the term in English, as we understand it, well, it's going to be all the more confusing for the rest of the world. And so I think that de-risking is a word that sounds very nice, sounds quite a lot less, let's say, violent than decoupling. But as what it actually means, I think we're going to figure it out as we go along. And it is going to drive a lot of variation between different countries as they interpret

it to fit their own political ends. Yeah, there's certainly a lot of room there for interpretation. One last question. For much of the rest of the world that is watching US-China competition, and I think specifically tech competition, they see this in a variety of ways, but it presents, I think, other countries, I'm thinking of economies in Asia and Africa, it prevents them both with risks, in that they may have to comply with sanctions. Some of this competition might be a zero sum game, which hurts other players. But it also presents other countries with opportunities, because they might see themselves as becoming venues for soaking up some of the excess capacity or some of the demand or supply in terms of manufacturing.

When you think of US-China tech competition broadly, what is your sense of how it impacts the rest of the world? sense of how it impacts the rest of the world? I think it is going to be a tricky line to walk for countries to try to balance risk as well as opportunity. There was a very substantial view in the Trump administration years, I think, that many countries that were not so directly aligned with the US's, with Trump's view of national security on China, were very eager sellers of their own technologies to China. And I think one of the great credits of the Biden administration was that it went up to European partners, partners in Asia, especially in Japan, to say, look, you know, this is a national security threat. They have convinced a lot of these countries to sign

on to the US agenda that when it comes to the Netherlands and Japan, they are mostly going to follow through with the US on these chip restriction sanctions. Now, when it comes to the rest of the world, well, unfortunately for China, semiconductor technologies that China needs are overwhelmingly concentrated in the West with America's partners. And so it becomes quite a lot more difficult to try to get crucial technologies that it needs, that I think the rest of the world might do very well in terms of selling goods that China needs, perhaps becoming a target in terms of US investment or Chinese investment, because these two great powers are going to be

keen to have these smaller countries on their side. But I think it is going to be a tricky line to walk. That companies that were thinking that, my goodness, now that our US competitors are now driven out of the market when it comes to a lot of semiconductor technologies, we're going to have a great time selling to China, they're now realizing that is less of an opportunity. And so I think this is things that are going to shift over time and not be able to really comfortably say that, for the most part, things are more opportunity than risk. Dan Wang, thanks for making time for us. Thank you very much, Ravi. sign up use the code fplive for a discount that's it for this week i'm ravi agrawal i'll see you next

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