Chinese companies

"A focus on manufacturing gives China another advantage in technological competition with the United States. It can simply wait for American scientists to do the fundamental research before Chinese companies take over the production. That is, in essence, what happened with the solar industry. Bell Labs invented the first solar cell, and German companies produced solar production equipment. Beijing’s designation of solar as a “strategic emerging industry” invited Chinese companies to rush into this industry. Chinese companies bought German equipment and competed fiercely to make the most efficient solar cells. By the mid-2010s, Chinese companies figured out how to make all the German tools, as well as the entirety of the solar value chain. The plunge in solar power costs over the last decade has been driven less by breakthroughs in science—which is the United States’ strong suit—than by efficient production, which is China’s strength. The beneficiaries are not only the climate but also China’s national power."

"And the manufacturers were cranking out a lot of goods. In the fall of 2020, I remember visiting the factory of a technology manufacturer outside of Shanghai. An executive had invited me in to tour his new production line. He was a Chinese national who had mostly worked for American companies and still traveled between the two countries. [As we sipped tea in his office](private://read/01k3jwt46q240aq6fe12mqkyr0/16_Notes.xhtml#_idTextAnchor330) after the tour, we chatted about why the United States was then mired in production difficulties, unable to make much of the personal protective equipment that people wanted. “American manufacturers constantly asked themselves whether making masks and cotton swabs was part of their ‘core competence.’ Most of them decided not.” He put down his teacup and looked at me. “Chinese companies decided that *making money* is their core competence, therefore they go and make masks, or whatever else the market needs.”"

"A focus on manufacturing gives China another advantage in technological competition with the United States. It can simply wait for American scientists to do the fundamental research before Chinese companies take over the production. That is, in essence, what happened with the solar industry. Bell Labs invented the first solar cell, and German companies produced solar production equipment. Beijing’s designation of solar as a “strategic emerging industry” invited Chinese companies to rush into this industry. Chinese companies bought German equipment and competed fiercely to make the most efficient solar cells. By the mid-2010s, Chinese companies figured out how to make all the German tools, as well as the entirety of the solar value chain. The plunge in solar power costs over the last decade has been driven less by breakthroughs in science—which is the United States’ strong suit—than by efficient production, which is China’s strength. The beneficiaries are not only the climate but also China’s national power."

"The Trump administration certainly throttled Chinese companies. But it did so by making American companies (especially those selling semiconductors) unreliable vendors. Previously, Chinese companies bought the best components on the market, which were often American, because they wanted to sell a globally competitive smartphone or drone. When they couldn’t buy American, it lit a fire under Chinese companies to try domestic vendors that they would never have previously given the time of day."

"The US government has indulged a preening self-regard concerning how much technological power its country still wields. American companies have spent two decades building communities of engineering practice in China, made up of people who roll up their sleeves to figure out how to overcome their daily bottlenecks. It wasn’t going to be easy to stop their progress; if anything, American policies risked accelerating it. So far, Chinese companies have managed to innovate around most technological restraints; rather than face precipitous collapse, as US policymakers predicted, some have even managed to keep growing at a healthy clip."