News on China's scientific and technological development.

A senior British banker exploded with an expletive-charged broadside when his bank was fined in 2012 for violating United States sanctions on Iran. He was quoted in legal documents as saying: "You ... Americans! Who are you to tell us, the rest of the world, that we're not going to deal with Iranians?"

Executives at ZTE are likely to have empathy with this frustration today. Punished by the United States for its commercial relationships with Iran at the start of the decade, ZTE must now be left asking itself: What gives the United States the power to punish a foreign company for doing business in a third country?

Companies doing business in Iran don't fall foul of any international law or regulations. But that hasn't stopped the United States from trying to impose crushing restrictions on ZTE's commercial operations for doing business in Iran. HSBC was fined 1.9 billion US dollars in 2012 for breaking US domestic sanctions, and was forced to end commercial relationships in multiple countries. France's largest bank, BNP Paribas, had to pay a fine of almost nine billion US dollars in 2014 for providing services to clients in Sudan, Iran and Cuba. ABN Amro was fined in 2005, as was Deutsche Bank in 2015.

What gives the United States the power to police foreign companies doing business far beyond its territory? Why should foreign companies have to follow the domestic laws of the United States?

The United States is a financial superpower that every international bank has to reckon with. The American dollar enjoys an unparalleled position internationally. If a bank wants to clear payments in dollars, they have to have a presence in the United States, which makes them subject to US domestic law.

In a similar vein, the United States can punish companies by wielding its monopoly on advanced technology. By preventing the supply of components from American companies to ZTE, Washington has put ZTE in a difficult situation.

Washington metes out punishment on foreign companies not to enforce international rules or laws, but because it has the power to do so for its own interests. As one French commentator described it, in the case of the fine levied on BNP Paribas, it is "a flagrant violation of international law and the sovereignty of the French nation."

There is little doubt that the United States is using its dominant position in finance and technology to push forward its own political agenda, national interests, and geo-strategic advantage. As the Financial Times reported, American regulators in 2011 warned money market funds about an overexposure to French lenders. This led to "a rush to the door" and as a result, "French banks pulled out of dollar-heavy areas, such as trade finance, leaving the door open for the dominant Wall Street banks to take market share."

America fears what it perceives as a threat by China to its dominance in high tech sectors such as 5G technology, artificial intelligence, and robotics. The decision to crack down on ZTE is regarded by many as an attempt to sabotage China's position as the leader in the development of 5G technology.

The way to stop the United States from using its dominance in finance and technology as an abusive weapon is for other global powers to provide viable alternatives. We are still a long way off from the day when countries don't have to rely on the goodwill and domestic imperatives of the United States for their own economic and technological development. But the ZTE case is a reminder of the importance of continuing to work towards that goal.

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vincent said:

You don't understand the ban. ZTE equipments contain a lot of American components. No American parts, no products.

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ZTE’s chip supply in question after US embargo order
ZTE's core products, such as media gateways, session controllers and packet gateways, are all based on Intel's high-speed FPGA chips

Chinese phone-maker ZTE, which has been banned for seven years from buying US components amid the escalating trade battle between the United State and China, has entered a critical period over the following two months,

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reported.

Though the company has not yet responded to the impact of the ban, ZTE has deferred disclosure of the first quarterly report of 2018 and continued the suspension of trading on the Shenzhen and Hong Kong stock market.

However, according to the company’s annual report, the amount of raw material inventory is generally 1/12th of total chip purchases in the current year.

This means that ZTE’s chip inventory can only support about one month’s production. Adding in the supply of its agents, ZTE is expected to continue the current production for just two months.

According to a source close to Broadcom, after the US Commerce Department embargo order was issued, Broadcom immediately stopped chip shipments to ZTE. Previously, annual purchases involving ZTE were more than US$1 billion.

Meanwhile, Intel officials stated that they have acknowledged the order and will comply with the requirements. ZTE’s core network products, such as media gateways, session controllers and packet gateways, are all based on Intel’s high-speed FPGA chips.

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Alibaba developing advanced chip for AI computing
Price/performance ratio of new neural network chip is expected to be 40 times that of current products on the market

Alibaba’s R&D arm DAMO Academy said it is developing a neural network chip — Ali-NPU — which will be used in image analysis, machine learning and other AI reasoning calculations,

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reported.

Jiao Yang, researcher at DAMO Academy, said CPU or GPU, as a general-purpose computing chip, is designed to deal with thread logic and graphics. Thus, it requires high power consumption when dealing with AI computing problems.

According to the design, Alibaba’s Ali-NPU performance will be 10 times better than the mainstream AI chips based on CPU or GPU architecture on the market, while the manufacturing cost and power consumption are only half of that.

According to the report, the Ali-NPU’s price/performance ratio is expected to be 40 times that of current products.

When the product matures, it will provide public services through Alibaba Cloud.

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supercat said:

The critical component of the ZTE ban is Intel’s high-speed FPGA chips. I suspect China does not need 7 years to develop a similar product if she is forced to do so. But no one should be surprised that the U.S. fails to see the long term picture here.

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In other news:

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taxiya said:

Looking from a higher ground and further into the future, the current ZTE issue is nothing new, nor anything substantial. China has been under western (primarily US) sanctions in technology, even until today. The total blocked from 1949 until the late 1970s, then followed by CoCom, which is replaced by The Wassenaar Arrangement until today. The very recent event is the ban of Intel chip. Was China strangled to death? Was China on her kneels under these sanctions? No, China just got stronger and stronger. And every time, when China began to master the blocked tech, the west began to open that tech for sale. Why? They know it did not work any more, so they wanted to make the last penny before they totally lost the chance. But by that time, China has no need for their tech. The ban will hurt China in short term, ZTE particularly now, but China will be just fine, so is ZTE, getting stronger. The ban is a push and a positive one for China to move forward and upward, it serves as a reminder to China and motivate China to succeed.

For this reason, I thank Obama for kicking out Intel from China and Trump for kicking out Qualcomm and other US companies out of China.

I feel sorry for Intel, Qualcomm and other American companies because putting politics and national survivals aside, they are very respectable tech leaders.

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hkbc said:

I wouldn't feel too sorry for Qualcomm, they've abused their monopoly of patents for certain US telecom standards to try and squeeze out competitors and have been fined big time by Korea, China and the EU (in excess of $2 billion). There's nothing special about Qualcomm's technology HiSilicon (Huawei's Fabless Chip subsidiary) already produces all the chipsets used in Huawei's high end handsets and it's Kirin line of ARM chips are competitive with Qualcomm's snapdragons. From a "China Inc" standpoint Qualcomm is just another one of those "pass through" companies whose technology is slapped into products assembled in China destined for foreign markets. Personally I think the ZTE action is just a stalking horse by the Americans if China just let it go they'll try the same tactics against Huawei (5x larger than ZTE and arguably much more technologically astute). Commercially this episode will suck for ZTE which has far more exposure to US and western markets than it's Chinese peers but don't think it will mean a great deal to China as a whole especially on the technology front, since it will just send up a flare to other Chinese companies to be wary of reliance on US markets and components.

There's a degree of arrogance in the American view of it's supposed technical leadership they've drunk too much of their own Koolaid and rested too long on their laurels. The prevalent mindset that the Chinese just copy and steal is going to have to face the reality that it's not actually true (c.f. you can't be simultaneously behind in hypersonic tech and for the Chinese to have stolen it from you!), just telling stories to make your children feel better isn't going to make it so, perception only takes you so far. China produces 8x more STEM graduates annually than the US, trying to address that by throwing marketeers and ad men at the problem isn't going to fix the disparity, nor is restricting the inward flow of skilled labour in order to prop up living standards, which only makes the situation worse.

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About 100 kilometers southwest of Beijing, a new city being built from scratch will be an example of the country's reform and opening-up, and inspire the world at large in decades to come.

China has published the master development plan for Xiongan New Area in Hebei Province, a new region of "national significance" following the Shenzhen Special Economic Zone and Shanghai Pudong New Area.

With high-tech industry and modern services, the new area is designed to become a zone for innovation, a digital city synchronized with a brick-and-mortar one, and a livable and business-friendly area.

Policymakers are eyeing Xiongan to be "a model city in the history of human development" by the middle of the century.

FUTURE IS HERE

Xiongan was born to be a city of green areas, a city of the people and a city of the future.

"There are no other metropolises where vegetation and water cover 70 percent of the total area as planned in Xiongan," said Wu Hequan, an expert on Beijing-Tianjin-Hebei integration and member of the Chinese Academy of Engineering (CAE).

Its residents will be able to have access to parks in only a few minutes' walk, a close-to-nature life that allows harmonious interactions with the environment.

The new area aims to be pedestrian-friendly with a goal that 90 percent of local transport means will be buses, bikes and walking, and daily necessities will be within a 15 minutes' walk from homes and workplaces.

Xiongan will be a modern city characterized by beautiful, safe and comfortable shared urban public spaces rather than a jungle of concrete and glass, according to Zhu Ziyu, chief planner at the China Academy of Urban Planning and Design (CAUPD).

Ubiquitous connections between smart transportation and utilities and the "city brain" will allow city management to be automated and infrastructure to self-adjust.

A digital version of the city will be built simultaneously with the physical one. "The digital-physical city system allows decisions to be tested in a simulated Xiongan before being implemented in the city," said CAUPD President Yang Baojun. "Xiongan will serve as a model for smart city development."

PIONEER FOR REFORM, INNOVATION

The official plan described the creation of Xiongan as "a strategy that will have lasting importance for the millennium to come, and a significant national event."

A year ago, China announced the decision to establish the new area, spanning three counties in Hebei.

By the middle of the century, Xiongan will become a significant part of the world-class Beijing-Tianjin-Hebei city cluster, effectively performing Beijing's non-capital functions and providing a Chinese solution to "big city malaise."

The significance of the new area goes beyond curbing urban sprawl and bridging growth disparities.

Analysts say it will also serve as a demonstration zone for the country's high-quality development.

"Xiongan's significance does not lie in how much GDP it produces, but its pioneering role in promoting reform and innovation and attracting talent, as Shenzhen did in the early years of reform and opening-up," said CAUPD expert Yin Huiliang.

The development plan says the new area aims to be at the forefront of cutting-edge technology, invite top-level tech industries, and push for coordinated development of the real economy, technological innovation, finance and human resources.

Xiongan has signed strategic cooperation agreements with Chinese Internet giants such as Tencent, Alibaba and Baidu, and more than 100 high-end high-tech companies are expected to operate there.

Policymakers will target major industries including information technology, modern bioscience and biotechnology, new materials, high-end modern services, and green agriculture, in contrast to the area's previous role as manufacturing base for packaging, clothing, shoes and stuffed toys.

Xiongan will be a replicable modern city located inland, neither near the coastline nor on the country's borders, Wu with the CAE said.

NEW DOOR TO WORLD

China has pinned high hopes on the landmark new area becoming a new door to the world, offering fresh opportunities for overseas investors and helping the country further integrate into the global economy.

Xiongan will serve as the center of a planned China (Hebei) Pilot Free Trade Zone, according to the plan. Restrictions on foreign investment will be dramatically lifted or eased, with a negative list fully implemented and all businesses granted equal treatment.

Intergovernmental cooperation will be pushed forward and a comprehensive bonded zone will be developed.

Xiongan is China's latest effort to open wider in the year 2018 that marks the 40th anniversary of the country's reform and opening-up policy.

China has unveiled a number of landmark measures to be taken this year to significantly broaden market access, from lowering import tariffs for vehicles and removing caps on foreign holdings to opening up the financial sector.

Earlier this month, China announced that the island of Hainan will become a pilot free trade zone and gradually a free trade port, which represents the highest level of opening-up.

As the world's second largest economy contributing one-third of global growth, China is walking the talk of opening-up and moving forward at its own pace, analysts say.

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China will complete the testing of high-speed trains that will run on a new line linking Beijing and Zhangjiakou, co-hosts of the 2022 Winter Olympics, by the first half of next year, an expert familiar with the project said.

A prototype of the trains will be manufactured and assembled by the end of this year, said He Huawu, technical advisor to the general manager of China Railway Corporation and member of the Chinese Academy of Engineering.

The Olympic trains will be based on the Fuxing bullet train design, but new technology will make them smarter and greener.

Construction of the Beijing-Zhangjiakou line is underway and running smoothly, according to China Railway Corporation.

The route is considered historically significant as the Beijing-Zhangjiakou railway, China's first independently-built railway,opened to traffic in 1909.

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