A quiet week

China Translated - Briefing #51

Hi folks. Since Day 1 of this newsletter, I have stated that one of its purposes is to cut through the noise and review things about China that have a lasting impact beyond news cycles. I try to write at least once a week, but if it’s a week when not many things of importance are happening, I may not write too much. I may not write at all. I hope my decision of writing or not writing is a piece of helpful information in its own right, so that you can have a better sense of what is important vs what is not.

And this past week has just been such an uneventful week, especially against the background of the tumultuous few weeks right before it, like a relative calm after a big typhoon.

Sure, there was this “Huawei chip guidance” that the US used to warn everyone against buying Chinese AI chips, especially Huawei Ascend, and China was understandably pissed. But none of this is surprising, and then there is also the question of whether such “guidance” can be enforceable at all.

The US chip policy against China is oscillating between two equally futile options: Either a water-tight, Biden-style embargo that would only serve to expedite China’s homegrown chip industry while leaving the rest of the world embracing Chinese chips, or, a Trump-style “diffusion”, maximizing sales to the rest of world but also making it easy for China’s to access the US chips, while China is still developing its own industry anyway, possibly at a not-so-different pace.

My lesson from life is that when you look at the world only in terms of winning and losing, instead of focusing on just yourself, you usually end up losing.

Sure, there was also the massive “Golden Dome” plan that effectively will weaponize space. China was pissed too, and with good reason: such kind of weapon system, while defensive in nature, can easily turn offensive too. After all, an average low-orbit satellite can orbit the Earth every dozen minutes. The thought that hundreds of satellites with missiles can fly over the Chinese mainland every few seconds could easily plunge the world into a massive, uncontrollable arms race in space.

But again, whether such an expensive system can be finished with enough funding is highly debatable. It’s helpful here to remember that Ronald Reagan’s “Star Wars” program, from which Donald Trump’s “Golden Dome” draws inspiration, never really materialized. America’s system is simply not fit for such a decade-long endeavor with a high price tag and questionable value.

Domestically, President Xi visited Henan Province. In a visit to a key bearing factory, his speech on manufacturing was interpreted by some casual observers as indicating that China was not really serious about boosting consumption and that the real focus was still manufacturing. But hey, why didn’t they mention that during the same trip, Xi also visited Longmen Grottoes, where he “noted the broad prospects for cultural-tourism integration and called for the high-quality development of the cultural and tourism industries to make them true pillar industries that improve people's well-being.” So is China pivoting away from, but immediately towards domestic consumption again, all in a single day? Truth will always elude you when you are obsessed with looking at China in black and white.

So, on a scale of 0-10 in terms of eventfulness, I give this week a solid 2. This will be as much as I write about this week.

For those of you who are waiting for it, I may finally have some time to start writing a long-overdue topic, which was sidetracked by the trade war, about whether “I am not against Chinese people, I am just against the communist party” is useful at all.

Finally, let me share some photos of my recent trips to Changsha, the capital of Hunan province. I have become increasingly fond of this city, where my company now has its headquarters.

Little-known fact: This is the only city in China whose name has not changed in 3000 years. But it’s also one of the youngest and most vibrant cities in China right now.

Young people sitting along the Xiang River at one of the many makeshift bars

2200 years old silk found draped over the coffin of Ms. Xin Zhui, depicting an imagination of the afterlife

A copy of Tao Te Ching, also found in the same tomb. The characters written there are easily recognizable by Chinese people of today

The Museum of Tongguan Kiln is one of the few museums where you can touch those 1200-year-old scrap ceramics at will, because there are too many of them

A major boring machine manufacturer. The machines in the picture are meant for exporting to Naples, Italy