This is the time when China said, you know, enough is enough.
For China, I think it is a kind of brand new practices.
The greatest risk to these companies is that they will lose the ability to have a competitive access to the Chinese market.
This is going to probably shape the future trajectory that on the one hand, there are some normalization on the trading relationships.
But on the other hand, the kind of tech competition is going to escalate.
The longer-term issues, I think will be determined less by the to-ing and fro-ing of the tariff and related negotiations but with ultimately, what the shape of the world looks like in five and ten years' time.
I feel that the atmosphere between these two countries are becoming normalised opinions on hot issues in a more casual way.
Joining me for a chat on this topic Yan Liang, a professor of economics, Willamette University in the United States, Dr Jomi, the deputy director of the Institute of American Endocennial Study, Chinese Academy of International Trade and Economic Cooperation and.
Warwick Powell, an adjunct professor, Queensland University of Technology, Australia.
Great to have you back on the show.
So let me begin with Dr. Zhou here in Beijing.
First on the anti-dumping probe.
Many people were surprised that China's anti-dumping investigation is aimed at analog chips, not CPUs or GPUs that usually grab headlines.
So why focus on analog chips?
Well actually, if you know the nature of anti-dumping, we know that it's a kind of rights, you know, given by the WTO as all the members they are having.
You know the commitments of not interfering with the international markets by subsidies or kind of interference of the prices.
So if one economy is trying to do something to support the enterprises or the companies when they are doing the business for the international competition by lowering its prices, the other economies or other member of the WTO have the rights to try to investigate that.
So anti-dumping, actually, there are several kinds of conditions.
The first one is that these products have, you know, some of this saline policies, which is apparently lower than what is sold in the domestic market.
But the second is that this country, the host country, when they import those products, the related or similar industries, they are affected or they are harmed.
And the third condition is these two things have some connections or consequences.
So for all the members, they do have the right to initiate or launch the anti-dumping practices.
But if you are talking about the semiconductor, it's really a very new area in my understanding, because most of these already existing anti-dumping affairs are something to do with the textiles, with the steel or the shoes or other areas like the panels, solar panels or some other things.
It's very rare for the semiconductor because it is leading products or leading sectors.
It means that these products have much higher profits.
As you mentioned about the GPU or CPU, those kinds of things are very expensive.
So not too many manufacturers or countries can do that. can make some of these things.
So they don't have to lower their prices for better competition and gain a larger share of the market.
But if you are talking about these specific products that we are trying to do some investigation, this product is really widely used compared with GPU and the CPU.
So there are more competition in this area.
I think that China's Jiangsu Association of Semiconductors.
They raised this proposal.
They said that the import of those products are distorting or affecting the competition and order and make the market distorted.
So I think that is kind of an argument.
So we are trying to have this kind of argument and trying to do some investigation.
It doesn't have to mean that these behaviors are there, but we need some response to those companies' requirements.
What kind of harm has it done to those Chinese manufacturers?
You said if an anti-dumping investigation is launched, there must be some harm done to those who launched this case, right?
Naturally the dumping actions is kind of trying to get a larger market share and expel or driving the existing companies away or the other competitors.
They want to stay in this market.
So they have to lower their prices too.
In this regard.
They may have a lot of harm by lowering the prices because they cannot have enough.
So when the anti-dumping affairs happened I mean the domestic markets, domestic companies they suffered a lot by these kind of behaviors.
As we know that for the economy, this is just the first step.
Normally, when the company is trying to dominate the market, they will use their policies as lowering prices at the first stage.
When they have destroyed or trying to be the only supplier or just one of the very few suppliers in that sector, they can raise the prices later.
So this is the hardness when the dumping thing is happening and it's unfair actually.
Legally, it is something to do to violate its commitment in the WTO multilateral trading system.
Right.
Like Dr Zhou just mentioned, compared with digital chips like GPUs or CPUs, analog chips are often seen as less advanced.
People might even compare them to analog TVs versus digital ones.
You would think that that would make them lower end, less profitable and easier for Chinese manufacturers to dominate.
So, Professor Powell, why are US companies found dumping them in China, when you would think Chinese firms would have the edge in this market?
Is that plausible?
Look, it is plausible because there are legacy manufacturing capabilities that have been established for a long time in these areas.
And these sorts of enterprises are working on business models that seek high volumes at relatively low margins.
And so if volumes through port is being affected, then it is important for operational purposes to find markets to discharge products to, so as you can maintain high utilization rates of your equipment.
And I suspect that that's what's going on.
I think the thing to remember about the analog chips is, whilst they don't get the headlines, as you say, they're actually fundamental to what we'd call the digital world.
We find them in EVs, in automotive sector, We find them in industrial machinery, electricity management systems and, of course, in the yet-to-fully-blossom Internet of Things sector.
So analog chips is really the mechanism that connects the digital world to the physical world.
It enables the collection of data, whether it's light or movement or sound or smell and those sorts of things.
And it also enables the control of energy resources within systems. application environments.
In fact, GPUs are actually pretty inert unless that infrastructure in the AR world is connected to the real world through some means or another, and analog chips are the means by which we do that.
From a revenue point of view, globally the analog chips market's worth about 100 billion, which is somewhere between 12 and 16 of total chips revenue.
So It's certainly not, from a revenue point of view, the biggest part of the sector, but it's also not a small part.
And for many of the firms that have been making these tubes, and particularly the ones that are subject to the investigation, This has been part of their core business for a long time.
So for three out of the four firms, the China market represents upwards of 30 of their revenues in this particular product category.
So it's not small biscuits as far as they're concerned.
Right.
Then Professor Leon, help us understand the timing of those investments probes.
They actually came before US-China trade talks in Madrid.
So people are asking, is it more about negotiating leverage than semiconductors?
Oh, I think part of it, yes.
I think the timing of this anti-dumping probe and also the anti-discrimination probe happened before this Madrid talk.
But I think, at a more fundamental level, I do think that this is time for China to really safeguard its own interest right to safeguard its technological sort of advancement space.
And I think there is evidence, for example, that Jiang Shu's semiconductor industry association has shown that these analog chips which yes, they are legacy chips typically, you know, 49 millimeters or higher, they've shown the price have continuously and significantly declined in quote, throughout 2024.
And they're also showing the imports of these analog chips have gone up quite substantially.
It grew by 12% in 2023.
And 22 percent in 2024.
So in other words, there seem to be some evidence suggesting this kinds of dumping behavior.
And I think that is definitely a problem because these chips actually account for about 40 percent of the total chips market in China.
So it wasn't trivial, as Professor Powell talked about.
And I think also, as you just mentioned, that there are many Chinese firms like Huahong Semiconductors SNIC, or Shanghai Fudan Microelectronics and others.
They are actually operating in various segments in this chip business.
So I think these kinds of dumping behavior is really, in a way, suppress the market prices, and they hindered the Chinese firms from being able to really scale up their production and seize a larger market share.
So I think, from a more fundamental level, aside from gaining some sort of bargaining chips at the negotiation table, I do think this has remained a problem that China needs to address sooner or later, not to mention the anti-discrimination probe, which I think we'll get to.
I'm actually surprised that this has been going on for such a long time.
I would say, as the Ministry of Commerce stated in their official record, some of these discriminatory policies or behavior from the United States, it has started as early as 2018.
So I think it is time for China to safeguard its interest and started these kinds of investigations, even though we know the WTO is in limbo.
But I think still this shows that you know China is going to and able to use these kinds of legal tools to safeguard its interest.
And, I think, also really legitimize these sort of competition in the tech space and allow China to also use these legitimate tools to safeguard its interest.
The Chat Lounge.
The Chat Lounge unpacks views and opinions on hot issues in a more casual way.
Like you just mentioned, actually those discrimination or discriminatory measures by the US side have been there for quite some time.
And the Chinese Commerce Ministry says the probe is based on the additional tariffs on Chinese integrated circuit products based on the Section 301 investigation since 2008 and actions taken since 2022 to restrict exports of products.
IC products and manufacturing equipment to China and the limit the participation of US personnel in Chinese semiconductor projects.
Then, Professor Liang, why do you think China waited until now to launch this probe?
Was it saved for maximum impact or anything else?
Well, I think again, China has the goodwill to try to cooperate with the United States, you know, through negotiations, to resolve some of these differences and this sort of relatively I would say you know the confrontational stance.
Right.
But I think the United States has not really heeded attention to China's resistance.
Right.
And China's criticisms against these kinds of behaviors, and what they have done is really doubling down on these behavior.
I think the last assault really comes from, you know, Donald Trump back in 2025 in May.
It basically, you know, changed Biden's policy on the Biden's diffusion AI policies.
Essentially, it really doubled down on restricting, you know, China's access to these GPUs and other advanced chips.
And also really take measures, like you mentioned earlier to you know, allow you know companies, AI companies, to use the NVIDIA chips to develop China's AI models and also not allow China's developers to use the NVIDIA chips.
So I think this just shows that without these kinds of legal tools and the more rigorous practices to safeguard China's interests just through goodwill, through negotiations, through talks, would not be as effective.
So I think really this is the time when China says, with all these aggressions coming from the United States, it is time for China to take a different measure.
And I think same thing was similar, you know, with the rare earths restrictions.
I think, again, China actually has a lot of tools, right, in its toolkit.
But I do think that China will use those tools when it sees appropriate.
And so, and, you know, the timing, yes, is important for the Madrid talk.
And I think you know, in the past four months there have been four talks, going from Geneva to London, to Stockholm and to Madrid.
And I think that you know, every single time you can see the United States seem to step back and you know, do something else.
That pretty much I would say in a way, walk away from the earlier consensus.
So I think, you know, this is the time when China said, you know, enough is enough.
And so we do need to use other means, right these legal ways to boast with China's bargaining power, but also really use different, maybe more effective ways to safeguard China's interests and push back the US'.
's aggressions.
All right.
And from a third country's perspective.
Professor Powell, do you have any other interpretation of this timing?
Look, as Professor Allen said, I think it really does dovetail into the Madrid talks, but there is an overriding set of issues here that go all the way back to 2018.
So this isn't a new thing.
I think China has consistently demonstrated noxious goodwill and sincerity in its willingness to engage in bilateral discussions with the United States by an incredible amount of patience.
The United States has, over the course of the last decade eight years to nine years progressively ratcheted up the heat, with the aim of containing China's access to new technologies, thereby restricting China's own economic development.
And during that period, China has engaged in a number of rounds of discussions with the United States, whether it was during the Trump administration times or the early days of the Biden administration, all of which, I think, is aimed at trying to find a satisfactory consensus solution to the issues on the table.
And every time there seems to be one step forward in these discussions.
Over time, the United States then turns around and new measures.
It ratchets up the rhetoric and really puts a spanner in the works of trying to find a settlement that works for all parties.
So it is sensible and understandable, and arguably a little bit belated, that the Chinese side has eventually reached into this first step of its legal toolkit to examine the situation and lay the groundwork for legally based responses to American containment and restrictions.
You both agree that the actions seem to be a little bit belated.
But, Dr Zhou, with these actions belated actions similarly at the core, what does china hope to achieve by launching these investigations, though i think other guests have already touched upon this, but from the chinese side, what's the purpose?
Well uh, i would say that uh naturally, it may be our consideration about whether china will do some kind of investigation to do with this discriminative way of treating chinese companies.
I think that is kind of a very normal phenomenon in the world when the United States is trying to force other countries to obey, or trying to bail down to them, and they will just follow.
So it's really a rare thing for other countries to say no to U.S. actions or practices.
As for China, I think it is a kind of brand new practices for this kind of anti-discriminative investigation.
So when China published these regulations at the first time, a lot of foreign companies just worried that maybe China will abuse the use of this kind of new tools to interfere with a company's benefits.
But some of them argue that it's not clear about what China will do with this new tool.
So continuously we are saying that China is very cautious about using these new tools, because we know that when you are opening a Pandora box, maybe a lot of unexpected things will happen.
So we are very cautious in doing that.
But the first case is not the United States.
That is Canada.
When Canada tried to put, more unilaterally, tariffs on China's new energy vehicles, China used this kind of practices to try to investigate what Canada's government was doing.
And we have more related taxes or tariffs to put forward the input from canada.
So as a response i would say that is a very, very unique one for china to use this kind of new tools, because we abide by our commitments in the wq.
We are not just trying to do a lot of interference of the practices to do with businesses.
So this is the second time.
I think that is a real requirement from the market.
A lot of companies suffer from this, you know, naturally.
Or discriminative behavior from the United States.
So we have to be a little bit more clear about the impacts, how much that the companies of China are affected by these discriminative practices.
So this is the reason why we want to put it here.
It's not just a personal perspective.
It's not just for the United States, because we are trying to do that.
I noticed that there are a lot of new pressures from the US government to the other trading partners.
US is simply to pressure other economies and other countries to discriminate the trade with China.
I think that is a very dangerous thing, because most of these economies in the world are are the members of WTO.
We have the most favored nation agreement or principles.
We should treat every economies equally.
If one country or one economy is trying to discriminate the other WTO members, that will distort the basis for the multilateral system.
So I think it's really our message that we want to deliver to the world.
We have to obey our promises.
If we are trying to change that, everything needs to be based on the negotiation with the related stakeholders instead of just trying to do something unilaterally.
So I would say it's not just a kind of attitude or tool to threat the United States or have more cars.
It may be beyond that.
I mean, that is my understanding with this kind of probe.
All right.
And we'll dive deeper into whether those targets or those goals of the Chinese side may be achieved or how effective those probes can be.
But let's talk a little bit about the implications or impact of such investigations.
So how might the anti-dumping probe affect those U.S. chip makers, especially?
I think Professor Powell mentioned that they've got a big exposure to the Chinese market, especially Texas instruments and analog devices.
So, Professor Powell, what kind of impact do you think they'll have?
Who's likely to face the most severe consequences?
Look.
A lot depends on ultimately, what the investigations find number one and what the response is from a policy point of view.
Number two.
You know the policy response could, from the point of view of the American firms, in a worst-case scenario lead to the loss of competitive access to the Chinese market and ultimately that has severe implications for the bottom line of the American firms.
Once Chinese buyers of analog chips qualify and switch to alternative supply options, those supply options tend to become quite sticky.
You don't want to be topping and changing out of these sort of foundational technologies on a regular basis, given that their reliable operations is central to your own value proposition to the marketplace.
So the greatest risk to these companies is that they will lose the ability to have a competitive access to the Chinese marketplace.
In the short term, it is conceivable that they will need to suck up any impacts with squeezes on their own margins.
That's not something that enterprises can do forever, but in the short term it's certainly a response that they could could have in the face of possible punitive or or um actions from chinese authorities should they find that the dumping has occurred.
Yeah, so look from a worst-case point of view.
We're looking at a medium-term structural loss of access to what is actually one of the world's largest markets.
With these kinds of chips, they're being driven by the Internet of Things economy.
They're being driven by the growth of electric vehicles, by 5G technologies, automation.
This is why the analogue space is actually incredibly important for the transformation of industries and actually the digitalisation processes of them, missing out on what is, in many regards, I think, a relatively stable growth market would be.
If I was a CEO or a shareholder in any of these companies, I would be concerned.
This has been The Chat Lounge.
When we come back, find out how the investigations might reshape China's chip market, the trajectory of the chip conflict or even the broader tech rivalry between the two countries.
Don't go away.
The strong wind was howling and whistling.
He was the first Chinese citizen to graduate from Yale University in the mid-19th century.
I was born on the 17th of November.
She had prominent features.
Three of us were old enough to lend a helping hand.
He navigated between two vastly different cultures and moved further to realize his dream and promote understanding between the people of China and the United States.
Ye Mingxin was a native of Hanyang.
I realized no danger.
China is really awakening.
Come and join us in discovering the incredible journey of Yong Wang in his autobiography My Life in China and America.
Check out the audible stories on radio.cgtn.com and all major podcast platforms.
Just search for the podcast Books and Beyond and find My Life in China and America.
Welcome back to The Chat Lounge.
We continue our chat on China's probes into U.S. semiconductors.
And Professor Liang, which company would you be most concerned for?
Oh, I mean, I agree.
I think these American companies, right, they are really much reliant on the Chinese market.
Even companies like NVIDIA, right, that's prior to the ban of selling H20, they pretty much rely on the Chinese market for about 30% of their revenues.
So I think you know this is sort of a wake up call to these American ship industry that if you know they lose the assets to the Chinese market, not only to lose all these revenues but I think they are also losing the opportunity to compete right.
To be able to know.
You know the industry trend, to know the consumer demand, to really able to compete with.
You know the best manufacturers in the world.
So I think that kind of market dynamics right and the loss of demand, I think it's really going to be disadvantage for these chip companies.
And I think, going back to your earlier question, in terms of you know how this would make, or not only affect, the US companies, but also China's companies.
I think one thing about timing is also.
I think China is also feels this is the time because it was able to really very quickly run up its production capacity of these legacy chips 20 nanometers or above considering that back in 2015, China only manufactured about 17 of the global share of these legacy chips.
By 2023, it reaches 31%.
And the forecast is it's going to reach about 39% by 2027.
So these are based on some of the rhodium and other CSIS research, their findings.
So, in other words, I think this is time when China also feels confident that if it cuts the market assets of these Western firms, it is able to ramp up production and produce these chips domestically for the market needs.
So I think in that sense I do see that China is able to seize a bigger market share if these kinds of anti-dumping investigations does find, you know, substantive evidence that the US firms are manipulating the price and dumping their products on China's market.
And I think in some ways it's unfortunate, right?
I think you know China is willing to work with these Western firms and have the kinds of technological cooperation that eventually will benefit you know both sides right.
Either China leaves the market share in exchange for some technological transfer or spillovers.
Or other firms, they are going to be able to get the Chinese market and collaborate with China.
So they are able to get the revenues to fit in their bottom line and help to provide more funds for their RD.
And also, again, participate in the very competitive ecosystem and innovative system in China.
So I think unfortunately, this could create a loose-roost scenario, even though I do think that you know, if Chinese companies are able to grab market share, that seem to be favor the Chinese firms, at least in these legacy chip sector.
But I think overall you know cooperation, it's really going to be helpful for technological advancements, right.
Economists always talk about this endogenous growth, where you know corporations and collaborations and technological innovations, right.
From very foundational science, where you can see a lot of Chinese scientists and American scientists.
They cooperate in the AI space.
And also from a market share perspective.
I think if you are able to divide labor and scale up the production, it's going to be much better right than having this kind of more confrontational approach when it comes to trade or technological innovations.
Yeah, like you said, it could benefit local Chinese chip manufacturers because they finally can get a break from the fierce competition from the US counterparts.
But it's always a double-edged sword, right?
It benefits chip manufacturers.
But on the other hand, Chinese manufacturers using those chips could face some difficult situation there.
There's one supply chain director warning that switching to domestic control area network chips takes some 12 to 18 months of recertification and sudden US supply cuts could halt production.
So, dr joe, how significant a risk is that?
Well, it is true that you know globalization has made us have a very, very good life.
So we can depends on the inter collaboration between the different countries, And especially for the semiconductor industry, I think it's one of the most globalized sectors.
We have so many different advantages in different countries.
They can only collaborate to make the perfect products.
So, based on that kind of scenarios, if China have to do these things by ourself, I think that the efficiency would be really a big problem.
And also the sustainability of the supply will be another problem.
And it is also true for the United States.
I think that rebalance of the semiconductors are meeting a lot of big issues, as these two professors have just mentioned.
Anti-dumping or some kind of investigation will give maybe another additional tariff for them to export to China.
While, on the other hand, the US is putting more tariffs under the 301 investigation on the import of the semiconductor from other countries, including China.
So these companies have to find out enough or big enough market to support their products and the research and development.
And these naturally are bad thing for the welfare for all the related stakeholders.
So for China, I think that it's extremely important issue because we are much bigger manufacturer.
And I think it's a much bigger demand for the semiconductors, including the analog chips.
So we have to try to do more things.
But, you know, when we have to do that, we do not have any other choices.
I mean, many companies rarely notice that as opportunities.
So in the previous several years I attended many conferences, and some of this are to do with semiconductors.
For the Chinese companies.
They are very happy that the United States do not want to export to China.
They are having more room.
But for the user, as you mentioned about the user of these chips, they have to find out a little bit more time to adjust to the new products as the standards, as technical requirements, requirements or other issues for the software connections.
So this really needs some time.
But when we have no choices, I think what we can only do is trying to shorten this whole process and trying to improve the input of the resources and the collaborations of these companies, and trying to make this term shorter and shorter.
And in another side, I would also argue, because you know, China have many collaboration with trading partners, but the United States also brought the trade with other countries by additional tariffs.
So it's more likely the Chinese chips or the future products can have a better expectation from the market, like for the affordabilities and also the sustainability of the supply.
I think it's definitely a real good news for Chinese companies.
So in such a kind of world, we have to consider about the profits together with the risks.
No companies can just survive by themselves.
That's for the benefits that Chinese chip suppliers can enjoy within a relatively longer term.
What about in the short term then?
Are we going to see any concussion from that?
Yeah.
I mean, when we were trying to do that, there's still some term.
I think that we are still in this process of investigation.
So that means that it maybe takes several months to get the result.
And after that we will also try to look at whether it is possible for us to reach some kind of consensus with the suppliers or manufacturers of the chips.
If they admit these facts and if they want to do some kind of changes about their pricing policies or changing their strategies of the marketing, I think it's also possible for not to have additional power rips on them.
But if the decisions are made, I think that definitely have some impact on the operation of these sectors.
But, in this regard, when the companies found that the administration is trying to do some investigation and that may affect their future supply, they will start to have more stocks, like what the companies have been doing when China and the United States proposed to end some new tariffs.
The companies are trying to increase their transactions process, to have better and more stocks to prepare for these kind of shocks.
So we don't have to worry too much about, you know, the sharp change or fluctuation of the supply.
The company, they have their own strategies and preparations, right?
Uh, professor powell?
Then the most dangerous um consequence you see from these investigations, with those measures on china's electronics sectors Well, the biggest challenge is always supply chain adjustments.
So if upstream supply options become unavailable and downstream firms need to qualify new supply options, that not only takes time to do, but it also takes time to bed down.
So that transitional period can be quite disruptive for enterprises, number one.
The upside is and that's a medium-term issue is that once those qualification periods are over and the transitional experiences have been gone through, then it is conceivable that a more streamlined domestic integrated supply chain environment emerges.
But to get there from point A to point B, going through a significantly disruptive period does cause enterprises to experience supply challenges, bottlenecks.
It impacts production.
It could impact product quality.
And, of course, when it impacts product quality and eventually productivity as well, it will impact the firm's standing in the wider marketplace.
So disrupting mature systems is not something that enterprise managers think would go out of their way to do.
They would much rather continue operating in well-known, proven and tested environments and pursue improvements collaboratively rather than under the pressure of enforced changes.
Then do you see any other manufacturers of semiconductors like those in Europe can enjoy any opportunities here?
Well look.
In these sort of areas, particularly in relatively mature product sets, There are possible supply chain options from many parts of the world, and it is conceivable that European players could find an opportunity to expand their footprint.
I would think, in the first instance though, that we're really looking at domestic supply chains being able to step up.
It is true.
I believe that the decision has been made on the basis of an assessment that, whatever the disruptions industry, both upstream and downstream, are now in a position to cope.
It's not to say that change is smooth, but there is, I think, quiet confidence from industry and regulators that Should there be need for a dramatic change in the structure of the supply chain, then enterprises are going to be able to handle that.
The preference, as I said, is to change as little as you possibly can.
But sometimes the need for change is outside of your control.
It would, of course, be the ultimate of ironies if one of the results of this investigation is to create new opportunities for intensified collaboration with European supply chain partners.
Some analysts actually argue this anti-dumping investigation is far more than a simple trade remedy, but rather a landmark event in the maturity of China's semiconductor industry.
I think Dr. Zhou already mentioned that aspect.
So, Professor Liang, how accurate do you think this kind of statement is?
Well, I think I also mentioned earlier, I think you know China always wants things in a very cautious way and always thinking about, you know, not the next move, but maybe the next two moves.
And so I think again the timing is right for China, not only because you know to gain some sort of bargaining power at the negotiation table, but more importantly, I think China feels it's ready right.
As I mentioned earlier that you know, China's legacy chips production capacity has ramped up very rapidly, from the global share of you know 17 back in 2015 to you know, over 31 in 2023.
So, and I think the benefits of having a large market, like in China, is that you can easily scale up your production and therefore you'll be able to, you know, reduce the cost of production per unit.
And that is a luxury I think many other markets may not enjoy.
But I think if China needs to fill the domestic demand needs by its domestic production capacity, I think China is able to do that.
Now, of course, as you mentioned earlier, the industrial leaders in the users industries, with the case on transition periods 12 or 18 months, with the supply chain disruptions, and by the alternative suppliers.
I think that is definitely some of the obstacles on the cost to be paid.
But again, I think in this case China has no option, because I think the United States has proven to be very unreliable as a trade partner right.
China does want to have the kind of interdependency with the United States, or other trade partners for that matter.
But I think, as far as technology is concerned, I think it's clear that countries have the interest to protect their core technological competence.
And I think the United States getting... all these behaviors, right?
I think you know.
China seem to believe these short-term adjustment costs are inevitable and it has to develop its self-reliance.
It has to be able to, you know, seize the market.
And I think again, this is unfortunate, because What we are seeing increasingly is in the tech space.
We're seeing two separate systems right.
Two parallel systems.
AI is one of the examples where you could have two different standards for semiconductors.
You have two different standards for AI technologies.
And so you know this kind of fragmentation.
It's not conducive to long-term technological innovations around the world.
But again, I don't think that countries these days could just sit down and relax and say yes, we can rely on other countries to supply us, you know, some of these leading edge, very core technologies.
You hear Donald Trump talking about imposing 100% semiconductor tariffs, right?
And so I think it's just yes, we do want to maintain a normal relationships and have that kind of interdependency.
And no, we don't like disruptions or short-term adjustment costs.
I mean whether these two investigations are that significant.
You know it's called a landmark event.
Dr. Zhou said it's quite rare in this sector.
But with these two investigations being taken, would that mean there will be more such proactive or active action from the Chinese side toward Washington or US semiconductor or tech sector in the future?
Well, I think it is possible.
I think I also mentioned earlier right that there are different ways of coping with the kinds of non-tariff trade barriers or you know, the kinds of restrictions that I think this is one way, this is one of the legal tools that China can resort to.
And it's definitely possible that you know this could be maybe utilized more often in the future, depending on I think again what you know, the father, you know, trade negotiations, brother stance right.
I mean, what is the case with China?
And I think it is a possibility that again a lot of these, the end result could be just separate the kinds of technological ecosystem right.
Using legal tools or using other policy tools.
And I think that that is a possibility.
Right.
And actually, those two investigations are not China's first probes into the chip sector.
Last December, Beijing launched an anti-monopoly case against NVIDIA.
During the recent bilateral trade talks in Madrid, Beijing also announced a preliminary antitrust finding against the company, which US.
Treasury Secretary Scott Besant called poor timing.
So, taken together, how could these moves shift the trajectory of the chip conflict or even the wider tech rivalry between the two countries?
Dr. Zhou.
So I think that you know this investigation you mentioned is different from this one, because those two are just having some you know, investigation about a certain target, a very individual company or several companies.
I think that one is you know something to do with their maybe improper behaviors, like to do with some of these weapons, to do with taiwan issues or other issues.
I think this one is different.
This one is based on the market because that economic benefits are, you know, for the trade, are really are important for both sides of important exports.
So i think that is a really are different level of investigation that really means that the chinese companies and chinese sectors and also Chinese governments are really concerned about the possible maybe the impact of the relations of the two sides of China and the United States to change.
So I think that is really our phenomenon.
We need to be careful.
I mean, that is also the message I think the US side has gotten from us.
But I want to end another comment.
I don't think that the attitudes of Chinese government has changed towards the US companies or exporters.
I mean for China side.
It is very clear stated that any kind of practices to do with commercial practices are welcome.
So we welcome the investment from United States.
We welcome the imports from United States.
But there is one condition that they are not trying to distort the market.
So actually, the market principle is what we stick to.
The market is the very precious things we respect.
So we want to keep it going and also not trying to discriminate any foreign suppliers.
But at the same time, you know, Chinese companies are really striving very hard to find some opportunities.
So we have to provide them with the same, you know, treatment like what we committed in the WTO as a national treatment, the NT.
The principle is also very important.
In terms of the future of U.S.-China economic relations, let's zoom out.
What do you think these probes suggest about the future?
And are we heading toward managed competition or a deeper decoupling in tech?
I mean just from these two investigations.
I think that from, if we put it in a bigger picture, like the TikTok results, or some kind of consensus made by these two about the framework of maybe the future trade agreements.
I think that, in my feeling, I feel that the atmosphere between these two countries are becoming normalized.
Maybe in the past we have so many, you know dreams or different kind of fancy about what the US is trying to do as a very fair country.
But now we have realized that that's fact.
So I think that we know that and we have already been prepared for that.
Maybe we're not ready now, but I mean the relation between the major economies in the world.
We are still evolving in the future.
So in this regard, it's not just unilaterally threatened from one side to another.
We have some response and that will also make that balance much better compared with before, like what we have observed with the United States and other economies.
It's actually different.
So I would expect that the relation between these two countries to stabilize in the coming future.
That is my hope.
But if it cannot happen, I don't think that we will worry too much about the future.
We still have more choices and we stick to the principle and we hope that the companies and the people of both sides can benefit from more trade and investment relations between our two countries.
All right.
And to Professor Powell, Look, it's hard to know what the short-term future holds.
There's obviously some issues to be addressed at both a short-term tactical level through the current trade discussions, against the backdrop of the tariff war that President Trump launched on the 2nd of April this year.
But The longer-term issues, I think, will be determined less by the to-ing and fro-ing of the tariff and related negotiations but with ultimately, what the shape of the world looks like in five and ten years' time.
And that's going to ultimately impact the way in which the United States has to come to terms with a fundamentally changed environment.
For the best part of 30 years, the United States has been able to dictate terms largely unilaterally, and its capacity to do that has been anchored by both economic strength and military capability.
On both of those grounds, the United States is no longer in a position to unilaterally dictate terms under all circumstances or under any circumstances, to everybody, and particularly in relation to large countries and major powers like China.
So the US is going to have to learn to live in a different world, and when it learns to live in a different world, I would expect that its general attitude and posture towards others will change as well.
The short term, though, is going to hack its up and down moments.
You know, when Scott Besant talks about poor timing, let's not forget that in the days prior to the meeting in Madrid, we had President Trump urging the Europeans to impose 100 tariffs on China and others who would dare to buy oil from Russia.
And on that basis, President Trump said he would do the same.
So if the Americans wanted to take a good look at themselves in the mirror for a change, they might realise that the hypocrisy that they engage in is not only not conducive to successful short-term discussions, but ultimately undermines their own longer-term interests in an evolving multipolar world.
Hopefully they can understand that.
And last but not least, to Professor Liang, how do you expect those probes to play out?
And are you concerned that there would be a deeper decoupling between the States and China?
Well, first of all, I think this poor timing comment just shows the double standards.
I agree with Professor Powell that not only Trump has been, you know, having upped the allies to impose high tariffs on China, but it also just put 23 Chinese companies, largely cat firms, on the entity list on September 13th.
But, you know, that I think it's also very poor timing, right?
Because that's when you need to build goodwill and trust when it gets to the negotiations.
So it's quite interesting when he said that's a poor timing for China's probes.
But I think the larger issue here is again.
You know, the United States is currently the superpower.
It is the, you know, technological leader in the world.
And so, seeing China's rise in the technological space, I think that sort of the sense of rivalry, the sense of competition right.
I think it's what pushed the United States to take these actions, trying to in some ways suppress China's technological advancements.
And I think that's probably going to stay for a while.
And if you remember, you know, starting from Trump's first term, or even before that right, this idea of We want to somehow be a couple.
But I think reality has proven that the couple of this idea is not going to work, because the United States has been deeply integrated into the global economy.
And so is China.
So it's very difficult to have a wholesale decouple.
But the idea is always, let's set the high fence with a small yard or less de-risk.
So you know, trying to really protect the core technologies and trying to really uh, get the upper hand in the technological competition.
So I think what I'm seeing is that this is going to probably shape the future trajectory that, on the one hand, there's some normalization on the trading relationships.
But on the other hand, the kind of tech competition is going to escalate, is going to continue to play out.
And so whether or not this can continue this way, right?
In other words, whether or not the US and China can compartmentalize the kinds of trading relationships right.
On the one hand, you can trade on all kinds of other products.
But on the other hand, that you do have the kinds of barriers for technological trade.
I think that it's likely to really determine how this future trajectory would look like.
And on that note, we wrap up our chat.
Many thanks to Yan Yang, Professor of Economics, Willamette University, Warwick Powell, Adjunct Professor, Queensland University of Technology, and Dr Joe Mi, Deputy Director Institute of American Endocenia Study, Chinese Academy of International Trade and Economic Cooperation, for your time and insights.
You can find us on all major podcast platforms.
Please email us your comments at radio at cgtn.com.
Join us for more insights at the chat lounge next week.
Till then, take care.
The best military commander is not he who fights a hundred battles and wins every one of them.
The best military strategy does not lead to the desiccation of the enemy's capital city.
Decoding the Art of War will help you understand why there's no art in war and how Sun Tzu stayed undefeatable using the science of war, with fun stories and insightful breakdown of famous battles.
Find Decoding the Art of War wherever you listen.
