The EU semiconductor plan: a case study in ignorance about Asia

Years ago, I came across an anecdote on a popular forum for foreigners in Taiwan, about how someone's family members in their home countries would ask the oddest things about life here -- think "do you have peanuts in Taiwan? If you don't have any peanuts there, we can send you some!" My own dearly departed grandmother once asked why I livd there at all, because "it's not a democracy!" This was in late 2006 -- she'd apparently not heard the news that Taiwan had democratized a decade previously.

These little stories illustrating Western ignorance about Asia don't mean much individually. After all, they're just anecdotes. I make no assumptions about any larger trends they might illustrate. But such anecdotes pop up often enough that perhaps it's worth exploring. I'd like to do that with a short case study -- truly, just something I came across and want to talk about.

Today, I woke up to this: 

 

Digital is the make-or-break issue. There is no digital without chips.

Yet today we depend on chips from Asia.

We will present a European Chips Act, to create a 🇪🇺 chip ecosystem from design to production.

This is about our competitiveness and tech sovereignty. #SOTEU pic.twitter.com/8vkjlvlad4

— Ursula von der Leyen (@vonderleyen) September 18, 2021

There's a lot to be said here, especially about the hinky economics of this tweet. That's not exactly breaking news, however, so I'll leave it until the end. First, take a look at some of the replies:

(You can read all these under the original link -- I didn't feel like embedding it all, as too much code makes Blogger weird. This is because Blogger is garbage). 

It's just astounding though: there are one or two replies, including my own, which point out that Taiwan, not China, is the semiconductor dominator. 

But for the most part, people who are against "globalization" and "dependence on other countries" seem to think this dependence is entirely in China, because Ms. von der Leyen said "Asia" and apparently Asia is only China, and maybe Japan. And maybe South Korea if you like K-pop. This assumption also conveniently forgets that the biggest competitors for dominance in that industry are the USA, South Korea and Japan...not China. 

Another writer might take this opportunity to say that fearmongering about China is misplaced, and the result is unfair Sinophobia like this. Obviously, I am against Asian hate and would never advocate for discrimination against Chinese people. That shouldn't even need to be said. But highlighting the threat from the Chinese government? That's pretty much right on target. The CCP is actually evil, they are indeed a real threat to the world, and yes, they do genocide. Any country dependent on a highly necessary export from China, or something like tuition from Chinese students should indeed be worried -- and looking for ways to reduce such dependencies.

This, however, is mostly the result of ignorance. Asia is far away, and China is of course massive and does produce a huge amount of the world's products. So, people will assume when someone like van der Leyen says "Asia", they mean "China". And since China is "bad" (which its government truly is), international economic cooperation is therefore "bad" and that lends credence to the belief that globalization is always "bad". 

This sort of ignorance also means that Taiwan gets ignored. Would these replies, and others who would agree with them, be so angry about international trade if they knew that the largest producers of the best semiconductors were Asian democracies? Why would someone even need to write about "smashing the free world" if you are in fact trading with the free world, and your trade with that free world helps keep much of Asia free?

The liberal democracies of Asia do need international links if they're to withstand the direct threat from China. Taiwan is at the front line of this, as China threatens literal invasion, but South Korea and Japan are well aware of the threat, too, even if it's more figurative for them: China isn't looking to take over those countries directly, they want the modern version of economic tribute from vassal states. 

If you want to support the values of human rights and self-determination, and countries which at least attempt to implement these ideals make the best of the cutting-edge technology that you need, wouldn't the wiser course be to support them?

Is it not simply smarter to buy from countries whose governments are friendly to you, which embody values you also embody, as a way of supporting those countries? 

In fact, it actually helps China to try and undercut its neighbors in Asia. You make subpar chips (sorry Europe, but mostly you do) so you lose a tech advantage. These neighbor countries -- again, friendly democratic states which share your values and stand against China's increasingly aggressive attempts at Asian and global hegemony -- lose your business, which hurts them, and their ability to help you stand against the Communist Party of China. 

How is this in any way a smart strategy?

Engaging in trade with countries like Taiwan, South Korea and Japan is economically more efficient. Militarily, the possibility that you might have to engage with China is reduced because you're supporting all these friendly countries which help contain it. You get the best chips, Xi Jinping gets mad, democratic Asia has a better chance at continued economic prosperity. 

Why the everloving hell would you want to undercut this?

And how can we educate Europeans who assume all of this is about fighting China for dominance, when China does not dominate in semiconductors? How can it be made clearer that Europe's trading partners in Asia, in this particular industry, are not the bad guys? How can awareness of Taiwan be raised -- not only regarding the admirable way it's managed to blast the competition despite being a smaller country, ignored politically by much of the world, but also for its fight for recognition, and the ways in which this fight actually align with Europe's values and interests?

I don't know, but that entire reply section sure was disheartening. Please wake up, drink a nice cup of coffee, and read a damn book.

So, now let's talk janky economics.

Is this the best use of European resources -- to try to build up a 'home industry' in a sector where they lag so far behind? Do they stand any chance of catching up to, let alone surpassing, Asia's semiconductor dominance in a way that makes any economic sense at all? Or would this be a huge resource dump with very little result except perhaps some subpar, behind-the-times chips? Because honestly, when it comes to this sort of tech, countries like Taiwan are 2022 and I'm sorry but Europe is twenty-twenty who?

(That was a bad joke, but forgive me, for I am old.)

And sure, some people would scream that I'm a filthy neoliberal for even saying that. I don't really care, because I don't consider it a libertarian position so much as one that just makes sense. I'm not against building up domestic industry in any given country per se, but this is not exactly like saying "we import all our zippers from China and we should make zippers here so China can't cut off our zipper supply, also they do genocide". One can also make an argument that making zippers domestically isn't efficient, but I'd rather tolerate some inefficiency than support a genocide, so okay.

But these chips we're talking about -- look, I've actually spent time around the people who run these businesses, and I am literally not allowed to say much about that (and won't), so all I'll say is these chips ain't zippers. You need the absolute best on the market to be competitive, and the definition of "the best" is always changing. The chances of Europe actually producing cutting-edge chips fast enough to make all that money worth it is...honestly, I hate to be mean, but it's like Turkmenistan announcing they're going to spend their whole GDP on becoming the industry leader in augmented reality. 

Perhaps that's a bit unfair -- this isn't exactly breaking news, and Europe isn't Turkmenistan. But the overall point remains. From the Financial Times back in July:
 

The question facing the EU as it prepares to embark on this undertaking, however, is whether it ends up squandering large amounts of public money chasing geopolitical ambitions that may not be supported by industrial and market logic. While Europe has world-beating strengths in corners of the semiconductor supply chain, it lags far behind Asia in particular when it comes to making the highest-end chips.

Changing that picture, executives warn, will take years of effort and vast quantities of public money — at a time when governments in Asia and the US are also pouring tens of billions of dollars of subsidies into the sector.

One could argue that the fear here is that China will take over Taiwan, but it still makes more sense to simply support Taiwan, rather than make it easier for China by insisting on building your own mediocre crap, when Taiwan is capable of producing the best of the best. You could help support Taiwan by buying the best from them and recognizing all of the good that comes from doing so. 

Then your constituents, or reply guys, or whomever, might not have such preposterous ideas about how this is all a big fight with China, when it simply isn't.

Swedish citizen Gui Minhai has been held by China for three years and Sweden has been super weird about it

Gui Minhai, Martin Schibbye, Johan Persson, Peter Dahlin

Taipei-based Swedish journalist Jojje Olsson held a talk last week on the case of Gui Minhai. Gui is a Swedish citizen abducted from Thailand by the Chinese government who, beyond some limited contact with family and Swedish diplomats, has been held basically incommunicado. In fact, the talk itself coincided with the date when Gui had been officially held for exactly three years. 

The most informative part of Olsson's talk was his description of what Sweden is doing (or not doing) to get him back. While they are highly involved in closed-door, quiet talks with Chinese officials, it seems odd that these talks are indeed so "quiet": not only has the government not been in regular contact with Gui's daughter, but the case seems to be far more low-profile than it ought to.

This weird silence can be understood in comparison to the government's reaction to two other Swedish journalists who were similarly kidnapped and held for over a year in a foreign country on trumped-up charges. Johan Persson and Martin Schibbye spent over 400 days in an Ethiopian jail for essentially doing their jobs. Similarly, Gui had broken no laws in Hong Kong, where his books (which were semi-biographical tabloid fodder about Chinese leaders) were published, and was in Bangkok when he was taken. Like Persson and Schibbye, he is a Swedish citizen.

This is even more eyebrow-raising, as other European countries (most notably Germany, according to Olsson, but including much of the continent) have not only more publicly called for Gui's release, but have tried to work together to collectively take public action. And yet, Sweden stays on the path of "quiet diplomacy", even though it doesn't appear to be working. Bad publicity scares China. A few polite Swedish diplomats? Yeah I don't think so. 

But in Persson and Schibbye's case, there was an uproar in Sweden and the government much more transparently and openly feuded with Ethiopia over their detainment. What's more, Swedish officials were regularly in contact with Persson and Schibbye's family members.

Why are they raising much less of a fuss in dealing with China over Gui Minhai? Why are they not in regular contact with Angela Gui (his daughter)? When Gui was snatched a second time from a Chinese train under the noses of Swedish diplomats who were taking him to Beijing for medical care, why did the reaction seem so muted?

In the international media as well, while the case has been reported by major outlets such as the BBC and the Guardian, the average person (including the average Swedish person, I'd gather) doesn't even know that this is happening. To even your typical well-traveled educated European, the idea that China would abduct foreign nationals in foreign countries might even seem farfetched. But that's exactly what they've done.

The suggested answer is that China is a powerful country, both politically and economically. Ethiopia means little to Sweden; there are fewer risks with starting an openly critical campaign to get abducted citizens back.

I suggest an even more obvious answer. Here is a photo of Swedish citizens with Swedish names, Johan Persson and Martin Schibbye:

Wikimedia Commons

And here is a photo of Swedish citizen with a Chinese name, Gui Minhai:

A screen grab of a screen grab - not many photos are available

Hmmmmmmmmmmmmm. Do you think it could be...?

Yeah, I do.

The rest of Europe, as noted above, seems to understand the gravity of the situation. I have to wonder why the Swedish government doesn't.

Certainly, China wants the world to think that Gui is Chinese and this is a Chinese matter. Gui is not Chinese; he may have been born in Ningbo, but China doesn't recognize dual nationality. The day Gui became Swedish is the day he stopped being Chinese. Regardless, Chinese state thugs forced Gui to say publicly that he wanted to renounce Swedish citizenship and he "slammed the country" on television. (It is certain that this was a forced statement; there is no possibility that this is truly how Gui feels about the matter).

It is well-known that China thinks of basically every person of Chinese ancestral heritage as Chinese; their actual nationality doesn't seem to matter to the CCP. They do this by threatening Chinese students abroad, taking over Chinese-language media aimed at the diaspora and threatening loved ones who may still be in China, among other tactics.

It's also not a stretch to see that they think they can get away with holding Gui in part because he, well, looks Asian. They are betting on the rest of the world seeing this as a "Chinese" issue, not an international one, and that the world cares less about these things. Basically, China is deeply racist about such matters (thinking everyone with Chinese ancestry is Chinese and therefore subject to CCP control  no matter how many generations ago their family left is racist), but they're also betting that we are racist too: that we will care less because Gui is Asian.

Why do I say this? Well, compare China's treatment of Gui to their treatment of another Swede involved in China: Peter Dahlin. Gui published books - legally - that threatened the CCP's reputation. Dahlin is an activist who threatens the CCP by working with human rights lawyers in China.

Dahlin was released after a few weeks. Gui has been held for three years. Dahlin was taken in China, over actions he undertook in China; Gui was taken in Thailand over actions he undertook in Hong Kong.

I'll repeat myself: Peter Dahlin is white and has a European name. Gui Minhai looks Chinese and has a Chinese name.

China didn't want a disappeared European on their hands, so they let Dahlin go. They are betting on you not thinking Gui is European.

Don't believe me? They abducted another foreign citizen too: Lee Ming-che. Lee is Taiwanese, not Chinese. But his name is Lee Ming-che and he looks Asian. Lee was abducted in China, over actions that he took in Taiwan where he broke no laws.

Like Gui, the Chinese government wants you to think Lee is Chinese and that this is therefore a Chinese matter and none of your business. It is no such thing. They want you to fall back on old mental blocks - for you not to care as much about people with Asian faces.

Still don't believe me? Despite Swedish officials being fairly quiet about pressing for Gui's release, China has started a massive diplomatic row over a family of play-acting Chinese tourists and China's ambassador to Sweden is something of a grandstanding jerk: all of this (even according to Olsson) seems to be related to China's attempts to pressure Sweden to just forget Gui Minhai exists, and to shift the spotlight of the Sweden-China disagreement from a Swede abducted by China to a family of shrieking stooges.

Again: China wants you to forget about Gui Minhai, and Lee Ming-che too. They want you to see these foreign prisoners of the Chinese state as "Chinese", so you won't worry your pretty little head about them. The Swedish government, for some reason, seems to be playing along just enough to keep Gui out of the news. The result is that most people seem to be forgetting about him, if they knew he existed at all.

You, however, should do no such thing.