This argument is ridiculous. If China is making the best chips in the world and does not depend on any foreign sources of equipment to make them, the United States greatly loses the leverage that has to bully others into not purchasing Chinese chips.
Chinese semiconductor industry
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This argument is ridiculous. If China is making the best chips in the world and does not depend on any foreign sources of equipment to make them, the United States greatly loses the leverage that has to bully others into not purchasing Chinese chips.
Ever heard of OFAC and the SDN list? If Huawei ends up on that list it means no company can do business with them at all regardless of which country they are from or whose equipment they are using. Samsung will get fined billions of dollars, for doing business with Huawei if Huawei is on OFACs SDN.
Plus you know why Meng Wang Zhou is getting extradited to the US? For being accused of doing business with Iran, whose entire country is on the SDN list. So unless Samsung CFO never feels like traveling to the US again, sticking their finger in the US governments face is not a good idea. I rest my case.
Honestly speaking, If what I believe is correct, the reason the US has so much leverage is because their currency is the backbone of global liquidity.
But have you think what if at least half of the world decided to shun US dollar and go their own way? US sanctions and political bullying is already pushing other countries to search for loopholes so they can continue trading with those US is sanctioning. Even the EU is getting more and more impatient.
There's a limit of political currency the US can spend on these sanction thing because the US dollar is fiat, meaning its value relies on the trust of others. Once the US exhausted their political currency limit, others might just decided to push the currency nuke button and forgoes US dollar as the anchor of global trade altogether because to them there's basically no guarantee that they can use it if the fickle US decided to freeze or sanction their US dollar bound assets.
That would also mean the US dollar is worthless in their eyes and the US would have to find another way to pay them if it still have to trade with them
That would really give the US a massive problem, as they would not only lose their massive leverage with the feds, which aside from printing money they can freely spend from nothing under the "deficit" umbrella also have the authority to freeze assets and fine foreign companies/ government that doesn't comply to US will (sanctions), but also the flood of rejected US dollars would devalue it so much that even zimbabwe's currency would look like gold in comparison.
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America is not even remotely as powerful as you are trying to make out. Trump has been trying to blackmail South Korea to pay the "protection fee" for quite a while with no luck.
eventually if the US wants to tough out, it need to show its hard power. unfortunately its fighting records in Asia since world War II are miserable at the least. got beaten in Korea, humiliated in Vietnam, and now begging for talk with the Taliban.
This is a question that I can't answer, because economist have been debating this for years. There is a concept called the tallest Smurf. The USD is imperfect but because other currencies are even worse in terms of liquidity, preservation of value, exhangeability, the USD remains king. That's why I don't believe there will be broad based sanctions against all Chinese companies, because that decreases demand for USD.
But putting Huawei on the SDN list is very possible. Because it's only a single company. And, no SK won't ditch the US dollar just do they can do business with Huawei.
When will too many sanctions cause people to ditch the USD, thats anyone's guess. But certainly it's not happening right now.
Talk is cheap my friend. While I agree the US is not as powerful militarily as people think. But they can make life miserable for Huawei real quick via their financial firepower.
Huh? Maybe @Deino should jump in here lol. YES of course Americans want to destroy Huawei. That's my point. I am just giving you the facts. Name calling is not useful. If you can refute my point, please do so. I think the SDN will make Huawei a domestic company only at best. I doubt even Chinese companies will want too much to do with Huawei, because a lot of them want to keep the US market share.
manqiangrexue
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You're not giving facts; you're giving opinions and guesses and putting those in a vacuum where China and the world don't react. The fact is, that against Huawei, American sanctions aren't working as they usually do against others and lots of people and countries are disgusted by American behavior. China has a hell of a lot more economic pull than it ever did with the US economy in the dumpster. Chinese nationalism sent Huawei domestic sales through the roof after the Google ban and any Chinese company that wants to survive wouldn't want backlash against that.
But to be honest, with the size of the Chinese market, Huawei wouldn't be in the pits even if it were just a domestic company. It would still grow and probably re-surge at some point in the future internationally as China continues to out-grow the US.
You said the USD is imperfect but because other currencies are even worse in terms of liquidity, preservation of value, exhangeability, the USD remains king. Indeed, that's what happened in history after WW2. The US was pretty much the only superpower with the economic, military and political clout to decide the global economy with their market, which is why USD stands to this day.
However, China has come a long way from being a nuclear power with impoverished economy. It now has the largest population, meaning the largest potential market if its economy continues to grow. India is its only rival based on population size, but after I see the mess called Indian politics I'm pretty sure China has the time to overcome US and stabilize its position before defending against India, if India wants the fight.
With sanctions, USD is losing exchangability at a rapid pace. Its liquidity was almost gone during 2008 economic crisis, and there's no guarantee that 2020 won't bring an even more devastating blow. Its preservation of value now relies on the wall street instead of the US/world economy, and that creates a bubble. When that bubble inevitably popped (because we know wall street), the last pillar of USD supremacy might be suddenly pulled from under it and the feds.
After that, what's preventing others from leaving the fickle bully called the USA and make peace with a stable bully called China? At least China stick with its agreements and principles and won't casually backstab its allies, even if the terms of the agreement might be skewed in China's favor.
Good point, sir. Sanctions are powerful, as long as one doesn't use them too often. Otherwise, the receiving end might grow resilience to negate it's effects. Such actions also create unwanted consequences, such as illegal back channel transactions, a push toward the rivals and alienating the allied nations. I think we have enough documented cases within our reach to easily observe these results of the late implementations, which eventually gave way to Russian influential expansionism.
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