A Bit More About China

I got a couple of interesting responses to my post yesterday suggesting that China is not a big threat. First this from reader DT, who objects to thinking of China as a single country with a fairly low per-capita GDP:

The issue here is that China is essentially two separate countries: (1) a bunch of really rich cities (population 200M+), and (2) an extremely poor rest of the country. Think of it as Mexico and the US under a single government. Unlike a normal country, authoritarianism and the hukou system keep the two more or less separate.

Per-capita GDP figures completely miss this reality. And it is important because China could become a serious competitor to the US if it had a very rich part of 300M (about the same size as we are) and a dirt-poor remainder of 1 billion people….You might think “oh, well those billion poor people are going to be a drag on the system.” But the bizarre reality of contemporary China is that they might not be. Who knows, the system might sustain itself indefinitely.

And this from reader RC:

I agree with what you said in your piece today, but I think you miss the key point. Yes, the US economy has a dominant lead over China’s, and Chinese internal policy is somewhat self-limiting. But the fight with Huawei (and others) isn’t about that at all. It’s broadly accepted that they are hard-coding access in their telecom equipment and burying various hidden functions in their silicon. The use of this hardware opens up a door to cyber espionage and sabotage that is orders of magnitude worse than the alternatives.

They’re still going to place these chips and switches in Western nations, but to the extent that we can keep that kind of compromised gear out of our networks we probably should.

I don’t know enough about China to have a considered opinion about these points, but I’ll toss out a couple of comments. On the GDP issue, this strikes me as a bit like saying the US is a country of 50 million with a per-capita GDP of $100,000, plus a bunch of poor people no one cares about. But you can say this about every country. Is it legit to make this comparison? Or is it legit only for China because their rich bit is so big in absolute terms?

As for Huawei, I agree that it’s “broadly accepted” that their equipment is compromised. But is it true? It’s not that I’d be surprised or anything, but I guess I’m a little more skeptical of accepting stuff like this on faith than I used to be.

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