A German Walks Into A Bar
A German walks into a bar and orders a beer. The bartender tells him it will cost him 20 euros.
The German is shocked. “Twenty euros? Yesterday, it was only 3 euros.”
The bartender explains, “Three euros for beer is right, but we’ve added three euros to help Ukraine, four as assistance to European countries who have imposed sanctions but are not members of the EU, four euros to help the UK to successfully implement sanctions against Russia. They need it. Brexit, after all. Then three euros to help the Balkan countries as an aid to buy furnace coal.”
“But that’s still only 17 euros.”
“Oh yes, we also have three euros for a gas subsidy for the EU to help maintain sanctions.”
The desperate-for-a-beer German silently gives the bartender 20 euros.
The bartender puts the note in the cash register and gives his customer three euros back.
The German is in disbelief. “Wait, you said 20 euros! I gave you 20, why are you giving me back three euros?"
“Ahh... We have no beer!”
We were reminded of this joke on the apparent futility of international sanctions when the Chinese tech giant Huawei released its Mate 60 Pro smartphone earlier this month. It came with a special ingredient — the seven nanometres (7nm) Kirin 9000 processor. The chipset reportedly uses Semiconductor Manufacturing International Corp (SMIC)’s second-generation 7nm fabrication technique, thereby demonstrating China’s capability to manufacture a 7nm chip.
Where does that leave all of those American sanctions against China in their tech war? Before we let our own Amit Kumar explain what that means, and where it is leading us, let’s refresh our memory. Here’s a brief timeline of Washington’s chip sanctions against China, from our friends at Quartz:
Aug 2022: The US Congress passes the CHIPS and Science Act, a law that approves subsidies and tax breaks to help jumpstart the production of advanced semiconductors on American soil.
Sept 2022: President Biden’s administration bans federally-funded US tech firms from building advanced facilities in China for a decade.
Oct 2022: The US Commerce Department bars companies from supplying advanced chips and chipmaking equipment to China, calling it an effort to curb China’s ability to produce cutting-edge chips for weapons and other defense technology, rather than a bid to cripple the country’s consumer electronics industry.
Nov 2022: The US bans the approval of communications equipment from Chinese companies like Huawei Technologies and ZTE, claiming that they pose “an unacceptable risk” to the country’s national security.
May 2023: Beijing bans its “operators of critical information infrastructure” from doing business with Micron Tech, a US-based chipmaker.
The Americans were in a tizzy. Had China circumvented their sanctions to the extent that Beijing was now confident it could be independent of American tech to build its own processors?
The answer is both yes and no.
Amit explains in this op-ed for The Hindu:
“While China’s technology demonstration deserves appreciation, the capability itself might not mean much as several challenges besiege its self-sufficiency drive. To begin with, the fabrication technique used by Huawei-SMIC to manufacture the Kirin 9000 processor is highly inefficient. The wafer yield (a metric of efficiency) of the deployed technology is way less than 50%. In contrast, Taiwan’s Taiwan Semiconductor Manufacturing Company Limited (TSMC)’s 7nm fabrication technique has a wafer yield in excess of 90%. This makes the SMIC’s process extremely expensive — up to 10 times the costs incurred by other players in the market, and therefore highly uncompetitive.”
That’s not all.
“In the U.S.-led ecosystem,” Amit writes, “the costs can be distributed among the participating countries, most of which have much higher per-capita income than China. Therefore, to compete with a larger pool of resources, China will need to strike a higher success rate on every dime it spends on research, which is difficult to achieve given that breakthroughs in basic research are capital intensive and may not yield success as often.”
It’s been a few weeks since the shock announcement (a shock for the US, that is), and after much consternation resulting from the initial ignorance of the development, Washinton’s palpitations have perhaps reduced.
Amit’s column has a lot more and explains the China conundrum in detail. You can read it all here.
Anushka Saxena later sat down with Amit for this brilliant episode of All Things Policy, where the two take the op-ed forward and explain what the new dimensions of this era-defining tech war between China and the US mean.
What The World Needs Now
In his 2014 autobiography ‘Anyone Who Had a Heart: My Life and Music’, legendary songwriter and composer Burt Bacharach said that one of the most difficult pop songs he ever gave music to was the anthemic anti-war song ‘What the world needs now’. You see, as a pop song, it is deceptively simple. Preachy, yes, and Hal David’s lyrics had almost a children’s poem-like simplicity, but why difficult?
Bacharach explained that they had the main melody and chorus written back in 1962, which was centred on a waltz tempo, but it took another two years for David to finally come up with the lyric, “Lord, we don't need another mountain.” Once David worked out the verses, Bacharach said the song essentially "wrote itself" and they finished it in a day or two. But it took two years to finish a song that looked so easy at first.
This is the problem with everything that is deceptively simple: you know it’s somewhere up close, but you just can’t reach it.
The nuclear no-first-use policy, for instance. It is commonsensical, it avoids Mutual Assured Destruction (MAD), and it should, ideally, be the cornerstone of every nuclear-armed country’s defence policy.
And yet…
When Lt Gen Prakash Menon read the text of the ‘G20 New Delhi Leaders Declaration’, he saw immediately how it adds a feather to India’s political and diplomatic cap. The declaration states that “the use or threat of use of nuclear weapons is inadmissible”.
But here’s the thing: If this is their commitment, then they should agree to a global no-first-use policy. No? The G20 is primarily an economic forum, but what is economic well-being without national security?
Lt Gen Menon writes in his astute column for The Print:
“Nuclear weapons along with climate change are two of the primary global existential threats. There is indeed a glimmer of hope when every nation of the G20 has endorsed the notion that the use or threat of use of nuclear weapons is inadmissible. There is now a strong case for India to follow up on the endorsement, by taking the lead along with China, for a Global No First Use Treaty (GNFU). Without a doubt, it will be a challenging task. But if accomplished, it will make the world safer than it is today.”
Russia had declared its NFU policy between 1983 and 1992, but later abandoned it. Other nuclear countries such as the US, France, the UK, Pakistan, and North Korea have steadfastly refused.
“So, when the USA, UK and France signed the G20 Delhi declaration it opened the space to seek and hold them to their commitments,” writes Lt Gen Menon.
There is a glaring contradiction in their stance: “The leaders recognised by the Non-Proliferation Treaty—the USA, Russia, China, France and the UK—have long subscribed to the view that nuclear wars cannot be won and should not be fought. They have reiterated this as recently as in January 2022. Their stance is that as long as nuclear weapons exist, they should serve defensive purposes, deter aggression and deter war.”
You can read Lt Gen Menon’s entire piece here.
China’s Regional Geopolitical Ambitions Are Aimed At India
The headline is a bit of a cliché, we admit, but when we hear two of India’s foremost experts on China and its geopolitical ambitions, especially in the context of India, it is always enlightening; it’s like going beyond the cliché and into realpolitik territory.
Vijay Nambiar, one of India’s most accomplished diplomats and former Indian ambassador to China and deputy national security adviser, teamed up with Takshashila’s Lt Gen Prakash Menon for an engaging and enriching discussion on this very topic organised by the Institute of Chinese Studies, New Delhi.
“India’s power,” Lt Gen Menon said, “if it grows at the speed that is unrestricted by… such things (China’s aggressive actions on the northern border), would become a threat if India tilts or shifts its weight (towards China), because if that happens, it is a major disadvantage for China.”
The Print, the digital partner for the webinar, reported it on its website thus:
“According to Menon, China is using the northern borders with India as ‘pinch points’ or ‘pressure points’ to apply “small amounts of military force” to keep India’s political and military energy and resources “sucked up”.
This is part of its larger strategy of trying to keep India restricted to the subcontinent. For several decades, it has been using and continues to use Pakistan as its southpaw (to keep India busy),” said Menon.
China’s strategy towards India, Menon said, has evolved. In the beginning, China declared there must be peace with India — this was the time when China focused on laying low and made quite a few agreements with India — while also developing its own connectivity and infrastructure, including military infrastructure in the provinces of Xinjiang and Tibet.”
You can watch a recording of the webinar here.
The Nuclear Option
India needs a way to generate a lot more power to keep up with rapidly rising demand without adding to its already severe pollution woes. For India, nuclear energy is the obvious solution.
Demand is increasing at a fast pace. Government data shows that power consumption grew 9.5 percent to 1,503.65 billion units (BU) year-on-year in 2022-23, mainly due to higher demand amid a rise in economic activities. Power consumption was 1,374.02 BU in 2021-22, according to power supply data until March 2023 from the Central Electricity Authority.
In June this year, power consumption grew to 139.23 billion units, up by 4.4 percent as compared to last June. In the year-ago period, power consumption stood at 133.26 billion units (BU), higher than 114.48 BU in June 2021, according to government data.
Saurabh Todi, a research analyst at Takshashila wrote a deep op-ed for Nikkei Asia on what the nuclear option for energy generation could mean for India.
To quote him:
“From India's perspective, the advantages of nuclear power are clear. A single kilogram of natural uranium can generate as much energy as the burning of 14,000 kg of coal. Nuclear plants require less maintenance, operate for longer periods before refueling and occupy less land compared with solar parks or wind farms. Nevertheless, nuclear power represents just 1.6% of India's energy mix. Coal and other fossil fuels account for 57% of generating capacity, while renewables and hydropower contribute around 41%. China at 5%, Japan at 7.2% and the U.S. at 19.6% each place significantly greater reliance on nuclear power generation. Indian power demand is expected to nearly double by 2030 to 412 gigawatts from 220 GW today. Expanded use of fossil fuels to meet this demand would present challenges. India's coal reserves are of low quality and importing coal is costly.”
Read Saurabh’s excellent analysis here.
He followed up his op-ed with a podcast episode for All Things Policy. You can listen to it here.
Enhancing India’s Role In The Indo-Pacific
India’s increasing development and maritime diplomacy in the Southeast Asian region suggests that the ASEAN-India relationship in the Indo-Pacific region is becoming stronger, underpinned by a convergence of interests in the Indo-Pacific.
Bharat Sharma, research analyst at Takshashila, looks at what these underpinnings are in an op-ed for Deccan Herald.
“India’s growing role in Southeast Asia as a security partner, underpins a stronger ASEAN-India relationship in the Indo-Pacific. As part of its diplomatic and constabulary maritime co-operation activities, in May 2022 India ‘gifted’ a missile corvette, INS Kirpan, to Vietnam, as well as discussed with Hanoi stepping-up training of Vietnamese personnel in areas ncluding submarine and fighter jet operations, cyber-security and electronic warfare. The same year, India also extended a $100 million line of credit to Vietnam for building high-speed guard boats.”
Read the full op-ed here.
First Jugaad, Now Hustle
Several Indian startups are characterised by hard work. But is that coupled with efficiency?
Takshashila co-founder and director Nitin Pai provides an insight into what hustle culture can do to Indian startups. You can read it here.
Dr Nithiya’s Tamil Videos Are Back (actually, they never went away)
The head of Takshashila’s Geospatial Programme, Dr Nithiyanandam wrote an insightful piece on military radar dynamics in Tibet on August 30. Deeply researched as it was, he did the next best thing — did a video explainer in Tamil, as part of his endeavour to talk about policy issues in regional languages.
You can watch the video here.
The Aging Issue, And How To Tackle It
In their ongoing podcast series on aging and elderly care in India, Sowmya Prabhakar and Malathi Renati speak with Nidhi Chawla on solutions to elderly welfare and elderly care and explore how other countries are tackling them. They conclude with the role of society, government, and markets.
Listen to their excellent and solution-oriented conversation here.
Twenty Years of Blogging… and Engineers’ Day
Is Nitin Pai an engineer first or a policy wonk? Or is he a blogger first or a book author?
Good questions.
Nitin has been blogging for 20 years, and the 20th anniversary fell on World Engineers’ Day. So he did what most engineers would do: think of a way to join the two dots and find an intersection of sorts.
Here’s what he wrote:
According to me, Nitin Pai, Electrical (Communications) Engineer, Nanyang Technological University, Singapore
Engineering is primarily the application of all domains of human knowledge to solve practical problems. A good enough real solution is better than an elegant non-existent one
There are always trade-offs.
Trial & error and successive approximation are a good way to do things.
In real life, there are often more variables than there are equations. Model the world, but remember that the model is a model and not the world.
Watch out for the edge cases but don’t let them discourage you from the main case
He asked other engineers as well (some of them are policy wonks!)
You can read his piece here, and congratulate him on the 20 years.
Wait, There’s More…
The Takshashila Institution hosted industry experts and CEOs for a workshop on India's bioeconomy on Friday, the 15th of September. The workshop was chaired by Kiran Mazumdar-Shaw, executive chairperson and founder of Biocon. The workshop focused on how India's bio-economy could be strengthened across areas like bio-agriculture, bio-services, and bio-manufacturing, and on understanding the complexity of the inter-relationships between science, technology, industry, economy, politics, and society.
That’s all for this week. Take care!