Xi’s new Long March and Trump’s new cold war

Access Archive

1. Xi’s new Long March and Trump’s new cold war

General Secretary Xí Jìnpíng’s 习近平 domestic tour to Jiangxi Province continues to feature prominently in Chinese state media coverage (Xinhua Chinese; Xinhua English; People’s Daily Chinese). As we noted yesterday, this included a stop at a rare earths processing facility, which telegraphed a threat to the U.S. that China could cut off supplies to the important minerals for technology components.

Today, the SCMP reports on Xi’s tour:

“We are here at the starting point of the Long March to remember the time when the Red Army began its journey,” Xi told cheering crowds on Monday, in footage posted on state broadcaster CCTV’s website on Tuesday. “We are now embarking on a new Long March, and we must start all over again.”

While Xi did not directly mention the trade war or the United States, his remarks are being perceived as clear signals that the Chinese public is being told to prepare for hardships because of the worsening external environment.

Also responding to increasing external hardships, Huawei founder Rén Zhèngfēi 任正非 gave a long interview with Chinese media (full transcript in Chinese).

Focusing on the actual chips may be a mere sideshow. The tools needed to design chips, called electronic design automation (EDA) tools, are dominated by a small oligopoly of three firms: Cadence, Synopsys, and Siemens’ Mentor Graphics. Without these tools, it is basically impossible to design chips. Furthermore, given that these EDA tools draw upon repositories of decades of chemistry and material science knowledge, it is virtually impossible for new EDA entrants or existing small tool vendors to provide the quality of tools necessary for complex chip design. Cadence and Synopsys have already announced their plans to stop servicing Huawei and its affiliates. The U.S. government, in line with its laws on export controls, will likely argue that Mentor Graphics uses significant U.S. technology in its products so that it, too, falls under U.S. jurisdiction. Cutting off Huawei, its affiliates, and, potentially, others that attempt to supply Huawei with chips from access to these EDA tools would sound a death knell for the company.

  • Triolo and Douglas also note that the U.S. Commerce Department’s 90-day exemption for the export control rules targeting Huawei (see Wall Street Journal report) are not a reprieve for Huawei, but rather “only a temporary measure, designed to allow suppliers to determine their compliance situation, and carriers to consider whether to change vendors given the threat to Huawei’s future viability as a company.”

  • “We could be moving towards a worst-case scenario for Huawei,” Triolo and Douglas continue, listing the ways in which “the ripple effects of a complete ban on Huawei access to U.S. tech will be huge.”

The apparent attempted shutdown of Huawei by the U.S. government is raising alarm about the trade war quickly morphing into an all-out fight to contain China’s economic rise — i.e., as real a “Cold War 2.0” as the Trump administration can make it.

  • “The US is seeking to constrain China’s rise,” the Financial Times editorial board simply states, adding that the “ban on companies supplying Huawei is damaging and ill-conceived.”

  • On Google’s compliance with U.S. government pressure to disallow Huawei access to Android updates, the Guardian comments, “The struggle over Huawei isn’t really about technology. It is about whether China or the US is to be master.”

  • Trade talks look to be doomed for the foreseeable future. Bloomberg reports that the Huawei supply chain attacks were “on the table for months,” and had only been delayed because Trump was afraid of upsetting trade talks.

Other recent commentary and reporting on Huawei:

Other reports on the trade war and tariffs:

Stories to keep an eye on: Suspicion of other Chinese companies rising, and Canada’s China relations crisis continues

—Lucas Niewenhuis

2. Stressed by high rent in Beijing? First win a Nobel Prize

Tongzhou District in Beijing, the capital’s sub-center that lies in the eastern suburbs near Hebei Province, has announced plans to offer rent reductions to those recognized as “talent” by the municipal government and who agree to work for a local employer for at least three years.

According to an announcement (in Chinese) from the Tongzhou government on May 21, the district is providing six tiers of rewards, commensurate with the tenant’s accomplishments. The highest reward is a discount on 100 square meters of a rental apartment, which is reserved for extremely high-end residents like Nobel laureates, Turing Award winners, and scholars at the Chinese Academy of Sciences. People who belong to the lowest tier of “talent,” such as senior technicians and Ph.D. students, can receive a rental discount on 40 square meters.

Given that a significant number of young people in Beijing are reportedly struggling to find affordable housing in the capital, Tongzhou’s incentive policies are expected to give it an upper hand in luring talented young migrants. But many internet users have ridiculed the Tongzhou government for its unrealistic hopes of attracting Nobel laureates with only the mildly tempting offer of rental discounts.

Click through to SupChina for more internet reactions to the news.

Jiayun Feng

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FEATURED ON SUPCHINA

The ripple effects of a complete ban on Huawei access to U.S. tech will be huge

The U.S. Commerce Department’s announcement that it is moving to cut off Huawei’s supply chain — only temporarily reprieved to allow suppliers to determine their compliance situation — signals that we may be moving toward a worst-case scenario for Huawei. That would be a Pyrrhic victory for the U.S., argue Douglas Fuller and Paul Triolo.