Tuesday, November 11, 2008

Interesting things to consider

I know I'm due to post something on the Zhuhai airshow and I will get to that this weekend along with some new 054A photos and other photos. But I read an interesting article by Pat Buchanan today and I thought I'd comment on it. For those who don't know, Pat Buchanan is a prominent conservative (the old-time fiscal conservative rather than social conservative of today). You can find the article here.

Basically, he raises some interesting points about the rise of China and fall of USA. If we really think about it, the biggest gap separating USA and China is the manufacturing capability and the technology gap. Even after years of improvement, US still leads China by decades in certain areas. I think what he stressed there that's important is that China has really been moving up the value chain in manufacturing. At the same time, US manufacturing industry has been on a steady decline and the service industry is by far the largest one now. When we shift the focus to the military side, it's clear that civilian technology/manufacturing trends are also present there. We see a vibrant shipbuilding industry in China, compared to a non-existent shipbuilding industry in America. So even though there is a technological gap between the latest PLAN and USN ships, the production is a different story. China is building many new naval ships on time and on budget, whereas USN is plagued with cost overruns. It all comes down to the fact that China has the manufacturing capacity here, whereas US does not.

Automaking is an industry that is the foundation of manufacturing. US became the manufacturing center of the world due to its car making prowess. The entire concept of assembly line and mass production was started by Ford. Make no mistake, even with the big 3 in trouble, US will still be the largest card producer in the world due to the fact that all foreign automakers are building their cars in America now. At the same time, you see that China is still having trouble breaking into European/North American market due to the safety and emission requirements in these markets. However, you are finally seeing different private and public automakers in China really expanding their operations and mass producing cars. So, there is a technological gap, but the manufacturing gap is almost irrelevant here. Both countries have the manufacturing capability to produce the trucks, vehicles and tanks needed for combat operation.

If we shift our focus to aerospace, it's a totally different story. In this area, US has a huge technological edge in material science, engine technology, stealth, aerodynamics and sensor. However, US has retained its manufacturing capability here, whereas China has a very low-end aerospace industry. As a result, we see that China has to rely on Russia for engines until WS-10A can be ramped up. We see that China has to cooperate with the Russians and Europeans on advanced helicopter designs. We also see that China has to cooperate with Ukrainians and copy IL-76 in order to get its own military transport. Even after it successfully develops an aircraft, it cannot produce them at the same rate as Boeing or Airbus or Sukhoi. Just look at how much trouble SAC is having in just produce 10+ J-11Bs. At the same time, we see that it simply does not have the work force, technology and expertise to mass produce larger aircraft like Y-8, MA-60 or ARJ-21. I don't really call producing 30 ARJ-21s a year mass production. However, you see that China is really attempting to catch up in this area the same way it has in shipbuilding and automaking. It is getting an assembly plant for Airbus 320 in Tianjin on top of the assembly plant for ERJ-45 and also trying to develop its own airliner. At the same time, it has ready become a major supplier for both Airbus and Boeing. And in the recent Zhuhai airshow, we heard news that China is buying a Western aviation firm.

It's been a general Chinese practice to start by producing the simpler parts and then slowly move up the value chain while advancing technologically. Eventually, it will be able to first copy and then eventually design its own machinery. It has already happened in shipbuilding and automaking. I think it will also get there in a decade in aerospace. There really isn't much Western companies can do here. China has managed to capitalize on the competition between advanced Western companies for the Chinese market by getting them to transfer technology in certain cases, do joint venture in other cases and source parts in other cases. Unless everyone refuses to sell to China, a nation that is devoting this much resources to advance technologically will succeed. And you can also see this happening in other major industries like nuclear power plant, renewable energy and space technology (to a less degree). And I think the best point that Pat made is this one.
With her immense trade surpluses, China's reserves have surged from $200 billion in 2002 to $2 trillion. Awash in dollars, Beijing now waits patiently, writes McMillion, to cherry-pick the crown jewels of America's industrial empire—"patents, talents, natural resources, brands"—at fire-sale prices in the global crash.

It's scary that he is mentioning this, because that's exactly what I read China is trying to do in the recent years. It has already bought out Western companies in automaking, CNC machinery for their technology rather than their business value. It's a luxury that most Western countries don't have. With a huge account deficit in most G-7 countries, they really don't have the money or the public support to rescue every company that has advanced civilian technology. Remember, China is trying to improve its overall technological and manufacturing prowess. Military industry will only be helped by advancement in civilian areas as clearly shown in shipbuilding.


dlhh said...

This article does not tell the whole story.

At present, the majority of China's exports to the West, Japan & South Korea are from foreign companies, not local ones.

China is only in the initial stage of industrialisation and it will be decades before she catches up with the developed world in technology.

She has yet to produce a world beating company like Toyota, Samsung, IBM, etc.

I would not take articles like this too seriously.

Jiang said...

dlhh, what are you talking about. China has already finished industrialisation. It just need to advance its tech more.

Jiang said...

Feng, I just read a very interesting news on www.163.com. Under the catagory of millitary. There is a news says that Vietname and Bhindia are negoatiating to open a port in Vietname so bhindia can place its tiny worthless carrier ther. Is this true??

Personally, bhindia barely has one carrier that is not even operational, the only plane it got is the OLD harrier!! The new indian carrier BUILT by Russia will use mig-29, but still it will not be handed over to them until 2010 and it will not be ready until 2011 by that time China may have its own carrier!!

Anyway, is this news true??? If it true. Then I think we should Imedeatitly SINK IT once it station there!!! I do not give a SH!T about the indians. I REALLY WOULD LOVE to see another WAR between China and BHINDIA!!! I am sick of hering them BULLSh!TTING!

Feng said...

well, they are exporting with their own brand in shipbuilding and now with automaker like Chery, Geely and others.

India hasn't signed anything with Vietnam.

RBi89 said...

What are your views on the next-generation fighter program? Do you expect such a program to run into serious developmental obstacles or do you forsee them reaching completion on time (ie 2012, 2015?)

Also, to dlhh-
While its true China exports from foreign companies, China has actual a far larger share on the global market in the manufacturing of subsystems and components than in actual assembly. In fact, regardless of whether the a finished product is assembled locally or in China, the components are most likely manufactured by Chinese subcontractors.

Feng said...

I think it's too early to say. Now, they have said that the first flight will definitely happen by 2012, probably earlier. If that's the case, I'd think it'd join service by 2018 at the latest. 2015 would probably be an optimistic mark at this point.

Jiang said...

lol. Well, I kinda know it is bull crap. Cause the artical is written by the japaness!!! After all these years and what they have done to China they still hate us!!

Jiang said...

Hey, Feng. I read another news. It says that China has already bought 14 Su-33 from Russia, and the RUSSIANS AGAING said that Chinese will buy more and the newer SU-33 will have a lot more advanced Irbis-radar, avionics, more powerful and TVC enginer, and more powerful weapon system!. Is this news true?? If the newer SU-33 can match J-11B's air combat ability and have the same air to ground ability as SU-30MKK2. Then perhaps it will be a fair buy. But anything less will be NOT WORTH it!

Here is the news source:


Feng said...

There is no need to get angry at any of these articles. We will see, the first 14 is pretty much a done deal considering that PLAN needs to train its first 50 naval aviation cadet on something. Outside of that, it's hard to see this going any further. I've written an entry on this already. And I wouldn't touch the junk that is 163.com

Jiang said...

So, Feng. You say that 14 is the most China will buy. Well, I remember you mentioned this a while ago, you are indeed pretty acurate predictor! Nice job. I think buying 14 for traing is not bad, since it will take us maybe 1 more year to turn J-11B into a naval fighter. But I really think WE SHOULD NEVER BUY MORE, cause russia has not credibility at all, they always raise the price at the end and their stuff are not as good as they advartised!

BTW, Feng. I read a lot of CRAP from 163.com I think the news on that site is so different from yours. Yours is a lot more logical and acurate. Keep up the good job.

You see, Feng. You and I may have different political agenda and different faith, but that is ok. We are both Chinese, and perhaps I should not be so mean sometimes.

Jiang said...

Also, Feng. You say you do software for living, so you must be pretty good at progmaming. Well, I now are having fun learning MatLab. It is fun, I also plan to learn C++, cause it has object-oriented programing ability and it is much faster and cheaper.

Feng said...

my word is not the end all, I'm just an amateur doing a lot of research, but 163 is definitely not a credible site for military stuff.

dlhh said...

To Rbi89:

Are the sub-contracting work done in China OEM work?

Take the case of Taiwan. She has a big share of sub components manufacturing in IT products but most of the patents & tech belongs to foreign companies.

Even today, she has yet to form a Tech company the likes of Apple or HP, Dell. As far as I know, even ACER is considered second best in notebooks and she has totally disappered in server computing.

While there no doubt that China is not Taiwan and she will definitely produce world beating companies, it will not be any time soon.

Even South Korea took decades to achieve this and she has access to the latest technology unlike China.