> Since 2018, following a backlash from the U.S., Europe, and elsewhere, the phrase "MIC 2025" has been de-emphasized in government and other official communications.
You cannot make this up. The West digging their own graves and protesting when their adversary isolates itself.
China, through MIC 2025, is clearly looking for an inwards economy centered around its large population, as opposed to an export oriented "factory of the world" economy (perhaps anticipating isolation in the event of invading Taiwan). The West didn't want that happening, hence they protested bringing those jobs back to their shores.
Taiwan doesn't own any IP behind the semiconductor manufacturing pipeline. China was going down the same path until it was interrupted by US's chip war. Now it's forced to develop its own lithography machines and software. It's a massive own goal by US politicians.
Getting Taiwan to join unwillingly, aka conquest, would probably end up killing the engineers that make those devices and destroying the factories. This is one of the advantages of a high-skill economy, the value is in the people, not the natural resources.
So, they’ll have to convince Taiwan to join willingly. Which basically seems like fair game, I mean countries should be allowed to form unions and join together if they want. It also seems extremely unlikely to happen given their history.
I’m under the impression that the main threat to Taiwan from China is more that China might do something basically irrational; the existence of Taiwan is sort of unfinished business from their point of view, and stoking the flames there is an easy way for politicians in China to appeal to nationalism.
Anyway, as wildly dangerous as it all seems, everybody thankfully seems quietly devoted to not actually escalating it too far, thankfully.
Everybody connects the dots differently. I personally would like to see TSMC (and ASML, and Intel) help China achieve this goal. It's not all black and white. They can help without giving away all their secrets.
I don't think I've ever met a blue collar worker who has thought outsourcing was a good idea. So, maybe the generalization of us worker is a bit too encompassing.
Maybe they didn't outright say it the way you posit.
But when Walmart came to town in early 2000s, people happily supported it with open arms. Bragging about how cheap they were getting stuff while the mom and pop stores and local sourced department stores folded one by one
Manufacturing is low value commodity work. If for some reason a country has lots of low value commodity bodies to screw things on, then focusing on manufacturing makes sense. But if you want a high standard of living, you need to have high productivity. That is incompatible with humans working assembly lines as they simply aren't that productive.
The US economy is the world leader and continues to pull ahead of everyone else.
It sounds like you have a pretty antiquated view of manufacturing. It looks nothing like what you are calling it: "low value commodity bodies to screw things on." No offense to you in particular, but it sounds like you haven't updated your views since 1975. This is common because most manufacturing happens well outside of the lives of people in tech or service work.
Most screws these days are not screwed on by "bodies." They are screwed on by machine. Much of employment in manufacturing these days is in higher value work: operating CNC machines, maintaining robots and other machinery, engineering, and so on.
If manufacturing work is so low value and commodity, why do manufacturing jobs pay $20k more per person, on average, than service work?
Why does the manufacturing sector have annual average compensation of $70k, despite taking place in generally LCOL areas?
Do you look at a modern car and say: wow, what a low-value commodity good?
The Economist article you cite says nothing about manufacturing and does not support your point. In fact, when you look at the total output of manufacturing today versus 1947, it is about the same percentage of our GDP: even though manufacturing employment has dropped from 35% of Americans to less than 9% because of efficiency gains. The idea that manufacturing has disappeared from America is false and a myth.
I invite you to actually go tour a modern manufacturing facility with high speed robotic computer-controlled production lines. It may make you think differently about the physical comforts you depend on in your life.
This is a commonly restated falsehood, manufacturing doesn’t have to be a commodity, you can just have labor laws and unions. The US had a thriving manufacturing sector for generations and it was the backbone of our economy, then we gave it all away in the name of cheap crap from Walmart and Amazon and sold out our middle class.
Look at Germany as an example, they do a lot of manufacturing and they have an excellent quality of life. They also make things that are objectively much higher quality than what comes out of Asia.
We can have both, an educated knowledge worker base and a manufacturing workforce, they are not mutually exclusive.
Some manufacturing, yes. But most manufacturing is highly complex, starting with t he suppliers, supply lines, workers etc. And manufacturing often brings in itself innovation.
"of low value commodity bodies to screw things on"
Most manufacturing is not so easy. Stitch some shoes in Africa? Maybe but even this is hard to scale in this environment. Try to assemble a complex product there. Hell, you might not even have reliable power and have to start building your own power backups there.
Not talking about military dependencies. What if Taiwan returns to China and does not deliver Chips anymore? How much of the world market do they supply? 70%
This take seems incompatible with the general prosperity nations that focus on manufacturing experience - look at the major economies of the 20th century, or of China’s booming wealth roughly commensurate with the stagnation developed nations are experiencing as they’ve outsourced manufacturing to China.
Except the high value jobs is in support of low value areas. Of which if those are outside your country then you are hosed.
For example google extracts value from sellers. If those sellers themselves sell product made and developed in china. Then soon enough the Chinese system will move up the chain by use of competitive regulatory, skill, and supply chain advantages
Genuinely curious, HN folks - for those who downvoted this comment, can you share why you did so? I don’t personally mind sarcasm as long as it’s not aimed maliciously at an individual, and I read this comment as a sarcastic way of saying “how come American leadership in general doesn’t have a similar plan”. Do folks just downvote sarcasm as a rule?
As I mentioned in another comment, this view is skewed. Even China has lost more jobs to automation than the US has lost to China. There will just be fewer and fewer jobs in manufacturing, no matter where it's done.
Further, from a purely economic sense, outsourcing makes the most sense. Most people will be able to by everything for much cheaper which more than compensates for the lost jobs in one area. We also have record high employment. So from a purely economic perspective, we are doing great!
To me the real issue is the strategic importance of certain manufacturing areas. China can build 200 military ships in the time we build one. 20 subs in the time we build slightly more than one. We need to get our military supply chain back in shape if we want to remain globally dominant and keep us and our partners safe!
I don't have the ability to downvote yet but I can pitch in an explanation:
Setting China as an outlier that does reshoring/industrial planning at the expense of the [American] worker is a politic fantasy. It forgets that reshoring is a global phenomenon also found in democracies [1] that is rather the result of a more uncertain world where logistics change with the success and wanning of political favors and alliances.
> To help achieve independence from foreign suppliers, the initiative encourages increased production in high-tech products and services, with its semiconductor industry central to the industrial plan
Based on where SMIC is at right now, they’re not doing too great on this goal.
Western countries have started strategic plans to become less dependent on Chinese manufacturing and especially the Chinese dominance in electronics manufacturing.
For such plans to succeed it is important to not mix them up with rural/flyover state job creation programs. One reason Chinese manufacturing has been a runaway succes is because how close their factories are to big cities and technical universities.
A future German Shenzen should be close to a big city with many technical universities nearby. A future American Shenzen should a stone throw away from Silicon Valley.
Also geography makes the US different, and very successful.
China concentrated growth near the oceans because it's rivers were rather wild and dangerous. Also the farther you go west in China, the more rugged and desert like the country is.
Meanwhile the US has two different coasts. It also has a central portion with a river that is good for transport of goods. This as you say, decentralizes the country and massively lowers the risk of any one event knocking manufacturing out in the country.
Chinese don’t have labor laws. It makes it easy to suppress wages, curtail benefits and have extremely stressful conditions in the name of “nation building”.
All big cities in the US are heavily democratic and most have fairly solid Union representation. You could partner with unions and universities to achieve those goals. But most corporations and unions look at each other in adversarial terms not collaborative. So, until that mindset changes you have the flyover state job creation. Those are the only places where corporations can get the labor price points and control they desire.
Either way there is no way the west is going to be able to match Chinese prices with existing labor laws.
I’m not advocating against unions.
I’m saying the west needs to add tariffs on Chinese goods to account for disparity in labor laws and protect its workforce.
They used to have plenty of chip plants in Silicon Valley. There's also tons of toxic waste to cleanup[1]. Maybe they should open these plants in the Mojave desert in places like Trona or near the Salton Sea that are already screwed environmentally. The problem is smart people who make a lot of money have to want to live nearby to physical stuff there.
> A future American Shenzen should a stone throw away from Silicon Valley.
Lol, heck no. Silicon Valley isn't the center of the universe, and certainly not for manufacturing, even low end electronics. There are many good schools other than Stanford and Berkeley too, you know. Best part? There are good schools all across America.
I agree on the notion. I do wonder though if a US Shenzhen needs to be close to SV. It would be ideal, but given how hard it is to build anything in SV, I wonder if a places like Austin would be a solid solution to consolidate hardware manufacturing.
If the US federal government bans noncompetes nationwide, then we’ll get a true competitor or successor to Silicon Valley. Until then, there’s little chance of any US metro to usurp it unless states like TX ban it themselves
Chinas manufacturing is only “good” because we offshored US manufacturing to it. Undoing this will result in the US regaining this capacity. You can make arguments about pricing, but luckily the political class is realizing there are more important things.
I recently read Invisible China by Scott Rozelle which raises concerns that impact this strategy.
TL;DR: Most of Chinese population lives in rural China. Birth rates in rural China are also much higher than in cities. Education and childhood development in rural China have severe issues. Quality of education, but also access to equivalents of highschool. Simple health care issues like worms, iron deficiency and lack of correction of simple sight issues that could be addressed with glasses. There is cultural pushback against remediations due to believes that glasses will ruin children's sight in the long run and work deworming will make young girls infertile and that you need some worms. Due to the hokou system rural children cannot attend school in the city in the many cases that parents from rural areas work in the city. Children get raised by grandparents who, as the book put it, know how to raise subsistence farmers. All these issues matter because to not fall into the middle income trap you need educated workers who can work in hightech manufacturing. China is becoming too expensive for cheap manufacturing, but struggles with a educated workforce for high-end work in much of the country. A concern with this is that this will create structural unemployment for badly educated workers who will make money in the informal sector (black market, but also crime) which drags everyone else down. Examples of this would be Brazil and Mexico. Countries like SK, Japan and Taiwan avoided this trap by creating a highly educated workforce before they need it.
One of the most surprising things in the book to me was that school, even before college, requires tuition and many poor families couldn't afford it. Quite the communism...
Edit: Given the massive urban/rural split in education the book describes, I could see limited success of the 2025 initiative in urban areas, but a total falling behind of rural areas with migrant workers as we've been seeing for the last 20-30 years not migrating any longer and no longer bringing money back home. This feels like a recipe for some form of upheaval. That combined with the cursed demographics, we have some interesting times ahead.
"In particular, according to hukou status, only about 36 percent of China’s overall population is urban and fully 64 percent is rural (some 800 to 900 million people). Owing to uneven birthrates between the cities and the countryside (until recently urban families could have only one child, while rural families often had two or three), China’s children are even more concentrated in rural areas. More than 70 percent of China’s children have rural hukou status today. This means that China’s future workforce is predominantly growing up in rural villages, where educational outcomes are still lagging far behind."
Rozelle, Scott; Hell, Natalie. Invisible China: How the Urban-Rural Divide Threatens China’s Rise (pp. 8-9).
So the difference here might come from where the population lives vs. their houku status. As I understand it from the book, the houku status dictates where your child is allowed to go to school. So while 36.11% might now "live" in a urban area, many of the children of those urban residents likely will have to live with grandparents in the rural hometown. Unfortunately, this is one of the sections where I cannot quickly find a reference to the source in the book. Maybe if I read the whole chapter again, but I cannot do that right nwo.
> There were 901.99 million persons living in urban areas, accounting for 63.89 percent; 509.79 million persons living in rural areas, accounting for 36.11 percent.
Interesting that the percentages for urban and rural sum exactly to 100%. Is there no concept of "suburban" in China? No in-between city and countryside? Honest question from someone who has never been to China.
Interesting. I was reading that China actually has too many college grads and now has a huge issue with educated youth unemployment because they’re all refusing to do non white collar work. Maybe they need more high schools and less univserities?
Readit News
You cannot make this up. The West digging their own graves and protesting when their adversary isolates itself.
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So, they’ll have to convince Taiwan to join willingly. Which basically seems like fair game, I mean countries should be allowed to form unions and join together if they want. It also seems extremely unlikely to happen given their history.
I’m under the impression that the main threat to Taiwan from China is more that China might do something basically irrational; the existence of Taiwan is sort of unfinished business from their point of view, and stoking the flames there is an easy way for politicians in China to appeal to nationalism.
Anyway, as wildly dangerous as it all seems, everybody thankfully seems quietly devoted to not actually escalating it too far, thankfully.
So their money certainly said it.
The US economy is the world leader and continues to pull ahead of everyone else.
https://www.economist.com/leaders/2023/04/13/the-lessons-fro...
Most screws these days are not screwed on by "bodies." They are screwed on by machine. Much of employment in manufacturing these days is in higher value work: operating CNC machines, maintaining robots and other machinery, engineering, and so on.
If manufacturing work is so low value and commodity, why do manufacturing jobs pay $20k more per person, on average, than service work?
Why does the manufacturing sector have annual average compensation of $70k, despite taking place in generally LCOL areas?
Do you look at a modern car and say: wow, what a low-value commodity good?
The Economist article you cite says nothing about manufacturing and does not support your point. In fact, when you look at the total output of manufacturing today versus 1947, it is about the same percentage of our GDP: even though manufacturing employment has dropped from 35% of Americans to less than 9% because of efficiency gains. The idea that manufacturing has disappeared from America is false and a myth.
I invite you to actually go tour a modern manufacturing facility with high speed robotic computer-controlled production lines. It may make you think differently about the physical comforts you depend on in your life.
Look at Germany as an example, they do a lot of manufacturing and they have an excellent quality of life. They also make things that are objectively much higher quality than what comes out of Asia.
We can have both, an educated knowledge worker base and a manufacturing workforce, they are not mutually exclusive.
Some manufacturing, yes. But most manufacturing is highly complex, starting with t he suppliers, supply lines, workers etc. And manufacturing often brings in itself innovation.
"of low value commodity bodies to screw things on"
Most manufacturing is not so easy. Stitch some shoes in Africa? Maybe but even this is hard to scale in this environment. Try to assemble a complex product there. Hell, you might not even have reliable power and have to start building your own power backups there.
Not talking about military dependencies. What if Taiwan returns to China and does not deliver Chips anymore? How much of the world market do they supply? 70%
For example google extracts value from sellers. If those sellers themselves sell product made and developed in china. Then soon enough the Chinese system will move up the chain by use of competitive regulatory, skill, and supply chain advantages
https://obamawhitehouse.archives.gov/blog/2012/01/11/everyth...
I'm in the area with the very Caterpillar plant mentioned there.
Further, from a purely economic sense, outsourcing makes the most sense. Most people will be able to by everything for much cheaper which more than compensates for the lost jobs in one area. We also have record high employment. So from a purely economic perspective, we are doing great!
To me the real issue is the strategic importance of certain manufacturing areas. China can build 200 military ships in the time we build one. 20 subs in the time we build slightly more than one. We need to get our military supply chain back in shape if we want to remain globally dominant and keep us and our partners safe!
Setting China as an outlier that does reshoring/industrial planning at the expense of the [American] worker is a politic fantasy. It forgets that reshoring is a global phenomenon also found in democracies [1] that is rather the result of a more uncertain world where logistics change with the success and wanning of political favors and alliances.
[1] https://www.diplomatie.gouv.fr/en/french-foreign-policy/econ...
https://news.ycombinator.com/newsguidelines.html
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Based on where SMIC is at right now, they’re not doing too great on this goal.
For such plans to succeed it is important to not mix them up with rural/flyover state job creation programs. One reason Chinese manufacturing has been a runaway succes is because how close their factories are to big cities and technical universities.
A future German Shenzen should be close to a big city with many technical universities nearby. A future American Shenzen should a stone throw away from Silicon Valley.
Throughout the Midwest, there are excellent research universities, large industrial manufacturers, and smart hardworking people.
It would be folly to try and relocate existing expertise into a concentrated area already struggling with crowding.
China concentrated growth near the oceans because it's rivers were rather wild and dangerous. Also the farther you go west in China, the more rugged and desert like the country is.
Meanwhile the US has two different coasts. It also has a central portion with a river that is good for transport of goods. This as you say, decentralizes the country and massively lowers the risk of any one event knocking manufacturing out in the country.
All big cities in the US are heavily democratic and most have fairly solid Union representation. You could partner with unions and universities to achieve those goals. But most corporations and unions look at each other in adversarial terms not collaborative. So, until that mindset changes you have the flyover state job creation. Those are the only places where corporations can get the labor price points and control they desire.
Either way there is no way the west is going to be able to match Chinese prices with existing labor laws.
I’m not advocating against unions. I’m saying the west needs to add tariffs on Chinese goods to account for disparity in labor laws and protect its workforce.
Guangzhou is the manufacture powerhouse of china. Which is, a stone throw from its silicon Valley, shenzhen.
But I believe shenzhen as a tech hub was selected for proximity to Hong Kong not because of Guangzhou.
Source: lived in China
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[1] https://qz.com/1017181/silicon-valley-pollution-there-are-mo...
Lol, heck no. Silicon Valley isn't the center of the universe, and certainly not for manufacturing, even low end electronics. There are many good schools other than Stanford and Berkeley too, you know. Best part? There are good schools all across America.
The most likely scenario is that companies are trying to find some other country to exploit.
There's a very entertaining book called "Poorly Made in China" that will quickly disabuse you of such notions.
TL;DR: Most of Chinese population lives in rural China. Birth rates in rural China are also much higher than in cities. Education and childhood development in rural China have severe issues. Quality of education, but also access to equivalents of highschool. Simple health care issues like worms, iron deficiency and lack of correction of simple sight issues that could be addressed with glasses. There is cultural pushback against remediations due to believes that glasses will ruin children's sight in the long run and work deworming will make young girls infertile and that you need some worms. Due to the hokou system rural children cannot attend school in the city in the many cases that parents from rural areas work in the city. Children get raised by grandparents who, as the book put it, know how to raise subsistence farmers. All these issues matter because to not fall into the middle income trap you need educated workers who can work in hightech manufacturing. China is becoming too expensive for cheap manufacturing, but struggles with a educated workforce for high-end work in much of the country. A concern with this is that this will create structural unemployment for badly educated workers who will make money in the informal sector (black market, but also crime) which drags everyone else down. Examples of this would be Brazil and Mexico. Countries like SK, Japan and Taiwan avoided this trap by creating a highly educated workforce before they need it.
One of the most surprising things in the book to me was that school, even before college, requires tuition and many poor families couldn't afford it. Quite the communism...
Edit: Given the massive urban/rural split in education the book describes, I could see limited success of the 2025 initiative in urban areas, but a total falling behind of rural areas with migrant workers as we've been seeing for the last 20-30 years not migrating any longer and no longer bringing money back home. This feels like a recipe for some form of upheaval. That combined with the cursed demographics, we have some interesting times ahead.
Not any more for at least a few decades.
In 2021 Census there were only 36.11% population living in rural China.
Edit: 2021, not 2011.
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"In particular, according to hukou status, only about 36 percent of China’s overall population is urban and fully 64 percent is rural (some 800 to 900 million people). Owing to uneven birthrates between the cities and the countryside (until recently urban families could have only one child, while rural families often had two or three), China’s children are even more concentrated in rural areas. More than 70 percent of China’s children have rural hukou status today. This means that China’s future workforce is predominantly growing up in rural villages, where educational outcomes are still lagging far behind."
Rozelle, Scott; Hell, Natalie. Invisible China: How the Urban-Rural Divide Threatens China’s Rise (pp. 8-9).
So the difference here might come from where the population lives vs. their houku status. As I understand it from the book, the houku status dictates where your child is allowed to go to school. So while 36.11% might now "live" in a urban area, many of the children of those urban residents likely will have to live with grandparents in the rural hometown. Unfortunately, this is one of the sections where I cannot quickly find a reference to the source in the book. Maybe if I read the whole chapter again, but I cannot do that right nwo.
> There were 901.99 million persons living in urban areas, accounting for 63.89 percent; 509.79 million persons living in rural areas, accounting for 36.11 percent.
Interesting that the percentages for urban and rural sum exactly to 100%. Is there no concept of "suburban" in China? No in-between city and countryside? Honest question from someone who has never been to China.
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