U.S. targets Chinese supercomputing — AMD, Intel, and Nvidia to lose business

Access Archive
Jeremy Goldkorn

Dear Access member,

Antony Dapiran is a Hong Kong–based corporate finance lawyer, a keen observer of matters Chinese, and the author of City of Protest: A Recent History of Dissent in Hong Kong. Antony also wrote this primer on recent protests in Hong Kong for CNN.

This morning, Kaiser and I talked to him for a Sinica Podcast about the massive demonstrations in his city. You’ll be able to listen to it on Monday via the Access member Sinica feed — let us know if you have trouble getting the show.

Speaking of Sinica, you might be interested in these recent episodes if you missed them:

—Jeremy Goldkorn, Editor-in-Chief

1. U.S. targets Chinese supercomputing  

The Wall Street Journal reports (paywall):

The Commerce Department is taking aim at China’s supercomputing push with new export restrictions that effectively cut five major Chinese developers of next-generation high-performance computing off from U.S. technology.

The entities — Sugon of Beijing and three of its affiliates, as well as the Wuxi Jiangnan Institute of Computing Technology — have been determined “to be acting contrary to the national security or foreign policy interests of the United States,” according to a Commerce Department rule made public Friday.

The Chinese developers are at the heart of Beijing’s effort to make the country’s first exascale computer, a next-generation supercomputer that would be capable of doing one quintillion — or one billion billion — calculations a second. Supercomputing is integral to the development of nuclear weapons, encryption, missile defense and other systems, and the U.S. and China are competing for dominance in the field…

…“Sugon has publicly acknowledged a variety of military end uses and end users of its high-performance computers,” the Commerce Department rule said, adding that Wuxi Jiangnan is owned by the 56th Research Institute of the General Staff of China’s People’s Liberation Army and has a mission to support China’s military modernization.

U.S. technology firms Advanced Micro Devices (AMD), Intel, and Nvidia all supply the affected Chinese companies with components.

Other news from various fronts of the U.S.-China Trade and Tech War — day 351 by our count:

Human rights as bargaining chip?

Tea tariffs

“Tea, along with fireworks and footwear, is on the list of goods that will have import duties imposed on them as soon as July if the US carries out its threat of adding 25 percent tariffs to thousands of products from China,” reports the South China Morning Post.

Huawei’s future without American suppliers?

“Chinese technology giant Huawei will start talks with officials at Russia’s communications ministry this summer on the possibility of using Russia’s Avrova operating system,” according to Russian news reports relayed by Reuters.

2. Hong Kong protests against police violence

Protesters in Hong Kong are back on the streets. The South China Morning Post reports:

Thousands of protesters besieged Hong Kong police headquarters on Friday, jamming doors, erecting barricades and blocking all street-level passageways in and out of the building. Police took no action to disperse the demonstrators.

Dozens of officers armed with riot shields stood guard at entrances of the Wan Chai complex…A law enforcement source said about 4,000 riot police were prepared for possible unrest or violence. “They are in police headquarters and in other police stations,” he said. The source said late on Friday night that there were no plans to disperse the protesters unless they stormed police lines…

…The protesters had gathered to demand an apology from police for what they felt was the excessive use of force in recent mass protests against the government’s extradition bill.

Meanwhile, to underscore the threat represented by the possibility of extradition to mainland China to certain international travelers passing through the city’s airport, another person Beijing considers hostile was denied entry by Hong Kong immigration authorities. Per the South China Morning Post:

The former foreign affairs secretary of the Philippines, Albert del Rosario, arrived in Manila late Friday afternoon after he was barred from entering Hong Kong. Del Rosario, who arrived in the city on a 7.40am Cathay Pacific flight, one day after saying China was “not to be trusted” over the sinking of a Philippine vessel in the South China Sea, was held and questioned by immigration officers at the airport before being deported.

The former diplomat told reporters at the Ninoy Aquino International Airport that a complaint he and ex-ombudsman Conchita Carpio Morales filed at the International Criminal Court against Chinese President Xí Jìnpíng 习近平 was the reason why he was held at the airport.

“It’s harassment. They have no right to hold me since I am travelling on diplomatic passport,” he told reporters, citing violation of the Vienna Convention. It’s an international treaty that specifies the privileges of diplomats to carry out their work without fear of coercion by a host country.

Further reporting

Commentary

3. Xi in North Korea — ‘a major diplomatic action’

Xí Jìnpíng 习近平 concluded his two-day state visit to the Democratic People’s Republic of Korea. It is Xi’s first trip to North Korea, and the first “state” visit between the two countries since they established diplomatic ties in 1949. The visit remains the top story on the websites of central Chinese news organizations (Xinhua reports in English and Chinese).  

  • Xi “paid homage to martyrs of the Chinese People’s Volunteer Army at the Friendship Tower” in Pyongyang today, reports Xinhua. The Sino-Korean Friendship Tower commemorates Chinese soldiers who lost their lives fighting against the American military.

  • Xinhua News Agency called the visit “a major diplomatic action that comes as the world is undergoing changes unseen in a century and the international situation is seeing complex and profound changes.”

  • The obvious motive for the increased emphasis on relations is that both leaders are locked in conflicts with the U.S., and seek to bolster their negotiating positions.

4. Keanu Reeves, Chinese-American?

In 2016, we interviewed Frank H. Wu, distinguished professor of law at UC Hastings and chair of the Chinese-American advocacy group Committee of 100, for a Sinica Podcast. He pointed out that although actor Keanu Reeves’s grandmother was Hawaiian Chinese, he is never referred to as a Chinese-American actor. Three years later, that seems to be changing: Reeves is self-identifying as a “person of color” based on his Chinese heritage.

—–

Our whole team really appreciates your support as Access members. Please chat with us on our Slack channel or contact me anytime at jeremy@thechinaproject.com.

—Jeremy Goldkorn, Editor-in-Chief

Here are the stories that caught our eye this week:

  • Two million Hong Kongers took to the streets on June 16 to continue to protest the suspended — but not withdrawn — extradition bill that they fear would fracture Hong Kong’s independent judiciary and give Beijing the ability to scoop up dissidents in the city. Protestors also called for the Hong Kong government to rescind its characterizations of June 12 demonstrations as “riots,” and some called on the city’s chief executive, Carrie Lam (林鄭月娥 Lín Zhèng Yuè’é), to step down.

  • Beijing blamed the protests on foreign agents from the U.S. and Europe, and characterized them as violent events that most Hong Kongers do not support. Taiwan was not convinced: The idea of a Hong Kong–style “one country, two systems” formula for the eventual unification that Beijing wants is now political poison.

  • Kim Jong-un welcomed Xí Jìnpíng 习近平 to Pyongyang for a historic two-day state visit. It is Xi’s first trip to North Korea, and the first “state” visit between the two countries since they established diplomatic ties in 1949. The obvious motivation for the increased emphasis on relations is that both leaders are locked in conflicts with the U.S., and seek to bolster their negotiating positions.

  • Trump and Xi will meet at the G20 on June 28–29, and presumably will attempt to restart trade talks. But Party messaging is not suggesting that Beijing is in the mood for any kind of climb down whatsoever. CCTV did make a sweet gesture and swapped out a Korean War movie with a Chinese-American WWII love story, but the People’s Daily also prominently displayed an opinion piece that concluded, “Retreating on any issue that concerns China’s core interests means giving up the future of China’s development!”

  • The business world is scrambling to plan for an uncertain future of a never-ending trade and tech cold war between the U.S. and China. Hundreds of companies testified before the U.S. Trade Representative this week to request tariff exemptions and warn that the import taxes would hurt consumers, cost jobs, and disrupt supply chains. Meanwhile, tariffs are forcing a huge range of companies, from Apple to Hasbro to Whirlpool, to consider rerouting their supply chains away from China.

  • TikTok now has more than 1 billion downloads, and has made a series of high-profile hires and publicity appearances, including at the Cannes Lions festival, as it continues its global march to dominate the short-video market. The Bytedance-created app is “plotting a raid on the advertising dollars flowing to Instagram, Snapchat and YouTube,” the Financial Times reported this week.

  • The China Space Station (CSS) will be operational in only a few years’ time. China’s Manned Space Agency has selected nine scientific experiments proposed by international teams to be conducted on the CSS. None of the experiments featured scientists from the U.S., though some did apply. The future of humans in space is being shaped now, and it’s looking a lot less American.

  • Hainan Island is purging “foreign” business names, or those that “sound feudal” or contain “deliberate exaggeration.” More than 84 buildings were targeted in a civil affairs office notice on June 11.

  • Chengdu is known as China’s “gay capital,” or “gay 都” (the Chinese character is pronounced “dū” and is both the second character of Chengdu and the word for “capital city”). Gay dating app Blued recently voted Chengdu the gay capital of China, although the city has had this reputation for some time. There were 140,500 gay men in Chengdu — a city of 16 million — according to a 2018 study by Tongle Health Counseling Service Center, though a UN study found that only 5 percent of China’s LGBT population is open about their identity.

  • The Chinese population of Kingston, Jamaica, was involved from the earliest days with the down and dirty ghetto music that became reggae.

BUSINESS AND TECHNOLOGY:

Taiwan’s richest man Terry Gou (郭台銘 Guō Táimíng) announced Friday that his successor as chairman of electronics giant Foxconn will be Liu Young-way (劉揚偉 Liú Yángwěi), the current general manager of the company’s semiconductor division.

After weeks of speculation, Gou revealed the new head of Hon Hai Precision Industry Co. Ltd., which does business under the name Foxconn, as the 68-year-old steps down to run in the 2020 election for Taiwan’s top leadership office.

The 63-year-old Liu will take over as Foxconn’s chairman on July 1, according to a company announcement. Li Jie, vice chairman of Foxconn’s Shanghai-listed subsidiary, Foxconn Industrial Internet Co. Ltd., will be promoted to become Liu’s deputy.

Dianrong, one of China’s largest peer-to-peer (P2P) lending platforms, said it’s planning a shift in strategy to focus on cooperating with traditional financial institutions as China’s regulators continue to tighten their grip over the industry…

…Dianrong, which has been compared to U.S. online giant LendingClub, is among thousands of P2P lending platforms hit by a long-running crackdown on an industry plagued by fraud, reckless lending, delinquent borrowers and usurious interest rates.  

SCIENCE, HEALTH, AND THE ENVIRONMENT:

China’s Sinopec has started trial operation of a new gas desulphurisation plant in southwestern Sichuan province… The Jiulongshan desulphurisation plant is able to process 1.2 million cubic meters of natural gas from Sinopec’s gas fields in the northwestern part of Sichuan province, a major producing region of shale gas in China.

POLITICS AND CURRENT AFFAIRS:

  • Censorship of history tests
    China moves to suspend some history tests for U.S. college credit / Reuters
    The Ministry of Education on Thursday ordered a suspension of history exams run by  Advanced Placement (AP), “a U.S. non-profit for students seeking credit at American colleges, as the ruling Communist Party cracks down on educational material it deems unfriendly.” Exams in science and mathematics run by the same organization remain unaffected.

  • Mass brawl at China-funded construction site in Bangladesh  
    Hundreds of Chinese, Bangladeshi laborers in deadly clashes / SCMP
    “Hundreds of Chinese and Bangladeshi laborers clashed at the site of a power plant being built south of Dhaka, police said on Wednesday, leaving a Chinese worker dead and more than a dozen others injured.” Locals say the company building the China-funded 1,320-megawatt plant has been covering up the death of a Bangladeshi worker at the site.

  • Belt and Railroad in Italy
    China, Italy launch modern railway R&D center in Turin / Xinhua
    The CRRC Tangshan Italy Modern Railway Transportation Technology Joint R&D Center “was launched Tuesday in the northern Italian industrial city of Turin by CRRC Tangshan to enhance bilateral railway transportation technology collaboration and innovation.”

  • Africa, the internet, and China
    Podcast: China, Africa, and the future of the internet. / China in Africa Podcast
    Scholar Iginio Gagliardone chats about his book on how “China is transforming Africa’s information space, and the consequences for geopolitics, security and Africa’s relationships with China and the West.”

SOCIETY AND CULTURE:

A hospital in southwestern China has reversed a decision to name its neonatal wards after renowned universities after being warned it might be at risk of legal action. The rooms at the hospital in Zhongxian county in Chongqing had been named after some of China’s leading universities, such as Tsinghua, Peking, Nankai and Zhejiang, as well as the likes of Harvard and Oxford, Guangzhou Daily reported on Friday.

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A crisis is a terrible thing to waste

Everything has changed in the U.S.-China relationship — where do we go from here? In an essay published to accompany this week’s Sinica Podcast, Ryan Hass explains why the relationship will not return to the days before President Trump was elected, and suggests five questions the U.S. policy community could use to structure its thinking toward China going forward.

U.S.-China supply chains and innovation: The risks the Huawei hawks don’t understand

The American government’s campaign to take down a $110 billion company with global operations that underpin critical infrastructure in over 100 countries around the world may fill China hawks in D.C. with glee. But, Paul Triolo writes, if you ask anyone deeply involved in information and communications technology (ICT) supply chains, you will instead hear their dread of the impending broad losses in revenue, harm to R&D capacity, and significant setback for 5G network deployment.

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In this installment of Jiayun Feng’s weekly review of interesting nonfiction on the Chinese internet, she looks at the contentious debate over traditional Chinese medicine, Ofo’s dramatic fall, end-of-life care in China, and the most relatable news program on Chinese television.

Kuora: Misconceptions about the Chinese and dog meat

The southern Chinese city of Yulin in Guangxi Province holds an annual dog meat festival called the Lychee and Dog Meat Festival, which begins on June 21. This week’s column, on the subject of dog meat, comes from one of Kaiser’s recent answers originally posted to Quora on September 2, 2011: How common is the eating of dog meat in China?

China’s firefighting agency slams a random internet user for criticizing its job

The national firefighting department under China’s Ministry of Emergency Management has gone off on a Weibo user with only 114 followers who questioned how the government failed to adequately equip Chinese firefighters with proper training and equipment.

Sponsored: Belt and Road interview: Scholar Dragan Pavlićević on BRI and China’s foreign policy

Dr. Dragan Pavlićević is a lecturer in the Department of China Studies at Xi’an Jiaotong-Liverpool University (XJTLU) in Suzhou, China. Pavlićević has three China studies degrees under his belt and has written extensively on a range of China-related subjects, including the politics of China’s overseas infrastructure projects, China-Europe relations, and China’s foreign policy. We recently spoke with him about his main takeaways from the Belt and Road Forum 2019, China’s infrastructure investment in Europe, and the Italian government’s MOU agreements with China.

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Sinica Podcast: A voice of reason within the Beltway: Ryan Hass vs. the so-called bipartisan consensus

Ryan Hass, who served as the Director for China on the National Security Council during President Barack Obama’s second term, is alarmed at the direction that the U.S. policy toward China has been taking, and offers good sense on what we could be doing instead. While clear-eyed about Beijing, he warns that the path Washington is now on will lead to some dire outcomes. Ryan joins Kaiser in a show taped at the Brookings Institution, where Ryan now serves as a Rubenstein Fellow with the John L. Thornton China Center.

TechBuzz China, episode 47: Chinese K12 English edtech: VIPKid and how learning is earning

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ChinaEconTalk: Of cell phones and seed prices: The Chinese legal system in theory and practice

This week on ChinaEconTalk, Jordan speaks with Donald Clarke, a specialist in Chinese law and the David Weaver Research Professor at George Washington University. Following a thorough introduction to the structure of the Chinese legal system starting from the Qing dynasty, Clarke discusses a provocative article he recently co-authored, Who owns Huawei?, which discusses in detail the legal ownership of Huawei Technology Co., Ltd. Clarke also deconstructs Huawei’s own legal arguments regarding whether its products (and, by extension, customers’ data) is subject to the Cybersecurity Law of the PRC and the National Intelligence Law of the PRC.

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In episode 17 of the NüVoices Podcast, host Joanna Chiu sits down with Siodhbhra Parkin, the director of the new, nonprofit arm of The China Project, to discuss her work in the field of legal advocacy against domestic violence when she was based at an international non-governmental organization (NGO) in Beijing. The two discuss the inspiring efforts of anti-domestic-violence activists in China both before and after the passage of a new law that has made collaboration between Chinese and foreign NGOs considerably more difficult. Siodhbhra also reflects on her experiences studying law in China, and the ongoing importance of finding ways to support beleaguered Chinese rule of law advocates and activists. Siodhbhra is a graduate of Harvard University and the Renmin University of China Law School and is now based in New York. This week, Joanna joins her from Vancouver, where she works as the bureau chief of The Star Vancouver.

Middle Earth #13: Crowded clubs and fancy festivals: The live music industry in China

Clubs and live performances featuring international music started taking off in China in the 1980s. Initially, the scene was very focused on foreign diplomats, journalists, and students who rented out restaurants and other spaces on the weekends. Gradually, as policies governing public radio broadcasts underwent reforms that allowed the performance of international music, a broader audience had access to the genre. Fast-forward to the present day: There is no shortage of music festivals, clubs, and other venues in China that feature performances by artists from around the world — to the extent that, if current trends continue, electronic music will be the most popular genre on Chinese radio airwaves by the early 2020s. In this live recording of the Middle Earth Podcast at the 2019 WISE festival, a few industry insiders discuss the current trends in this lively line of work.

The Caixin-Sinica Business Brief, episode 89

This week on the Caixin-Sinica Business Brief: the Hong Kong Stock Exchange, China’s baby-formula makers, the credit reporting system in China, how Didi is back on regulators’ watch lists, Doug Young on Alibaba and its proposed listing in Hong Kong, and more.

Jeremy Goldkorn worked in China for 20 years as an editor and entrepreneur. He is editor-in-chief of The China Project, and co-founder of the Sinica Podcast. Read more

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