Sharp China w/ Bill Bishop — Episode Summary

Episode Title: Final Updates to the Biden Chip Controls; Peak Tough on China?; PLA and CEWC Speculation; More Trump Questions than Answers in Beijing
Release Date: December 4, 2024
Hosts: Andrew Sharp (A), Bill Bishop (B)

Overview

This episode dives into the recent, long-awaited updates to U.S. chip export controls on China, evaluates whether Washington is retreating from its “peak tough” posture on China, examines upheaval and opacity within China’s military and policy apparatus, and assesses uncertainty around how a returning Trump administration might reset the relationship. The hosts provide sharp critique, industry insight, and skeptical commentary flavored with wit and realism about both sides’ strategic calculations.

Key Topics and Insights

1. Final Biden Administration Chip Controls: “More Bark Than Bite”

(00:24 – 15:45)

• Commerce Department Updates: After months of speculation and delay, the U.S. Commerce Department announced revised export controls meant to further curtail China's technological advancements in semiconductors, AI, and advanced computing (00:24–01:15).

  • Noted analyst Gregory Allen (CSIS) quoted as saying:

    “These controls are weaker than what the United States should have done... The worst thing you can do is to dramatically signal your intention to cut off China's access to tech, but then have so many loopholes and such bungled implementation that you incur almost all of the costs of the policy with only a fraction of the benefits.” (01:15–02:33)

• Watered-Down Regulation: Biden’s team unable to secure Dutch, Japanese, and Korean alignment. As a result, American and foreign semiconductor firms successfully lobbied to water down restrictions to preserve Chinese revenues, leading to further stockpiling by Chinese companies (02:36–07:51).

  • Memorable moment:
    B: “All the lobbyists and chip firms are going to have a good holiday bonus.” (08:14)
  • Industry Wins: Controls delayed until Dec 31, leaving another window for stockpiling; industry stocks rise on Wall Street and in Japan (05:57–07:51).

• Partial Controls, Big Risks: Half-measures have both failed to fully constrain China and spurred aggressive Chinese investment in indigenous alternatives.

  • B: “You’ve completely focused the Chinese side on de-Americanizing their semiconductor stack... yet you’re letting SMIC, Huawei and its network continue to grow.” (08:20–09:33)

• Strategic Implications: The U.S. had real leverage over China in AI/advanced computing but failed to decisively act. Even national security press coverage is now more skeptical of the government’s claims to toughness.

  • A: “It's just been really slow to act in any comprehensive way to use that leverage and preserve that strategic advantage.” (10:07–11:15)

• Historical Context: Initial October 2022 Biden chip controls were far more robust, triggered by the fallout from Pelosi’s visit to Taiwan and subsequent PRC escalation.

  • Both hosts note that momentum for hawkish policy has since “flagged” and DC may have passed “peak tough on China” (04:36–05:00, 11:41–12:05).

• Speculation on Trump 2.0:

  • Future tech policy could be heavily shaped by personal interests (e.g., Elon Musk’s priorities with BIS) and less by cohesive national policy.
  • B: “If Musk has a voice into who might be running BIS, would he really pick someone who's going to be especially tough on China?” (07:11)

2. Lobbying, Revolving Doors & Systemic Skepticism

(08:14 – 15:41)

• Industry Revolving Door: Expect to see current Commerce officials move into lucrative roles with chip/lobbying firms post-administration.

  • B: “It's D.C... lots of things that look like they might be somehow corrupt or totally legal. We'll find out in the new year who from Commerce goes to which chip firms and related lobbying law firms.” (08:20)

• Effect on PRC Tech Strategies: The less ambitious controls have bought China time, especially for Huawei, SMIC and sprawling local supply chains.

  • “History is not going to look kindly on how the Biden administration prosecuted these controls.” (09:33)

• Arguments Against Controls Debunked:

  • A: “A lot of the arguments against chip controls from people like Jensen Huang are pretty facile... They haven't been effective because there have been huge, well-known loopholes this entire time.” (13:58–14:56)

• Fundamental Dilemma: “If you make the argument they don’t make sense because they’ve failed, and you don’t talk about all the lobbying... it’s not an honest intellectual debate.” (B, 14:56)

3. Peak Tough on China? TikTok, Trump, and Policy Volatility

(15:41 – 20:58)

• Peak Toughness Passed? Both chip controls and the TikTok ban represent a possible high-water mark in US hawkishness.

  • B: “It’s not a zero percent possible outcome we’re past peak tough on China.” (15:41)

• TikTok in the Legal Crosshairs: Looming court decisions could see a TikTok ban take effect days before the next administration—Trump could simply not enforce it.

  • “The TikTok ban was sort of peak tough on China in D.C.” (17:02)
  • Noted TikTok’s “indestructible” lobbying resilience and how, unlike chips, there is a domestic industry coalition (Meta et al.) favoring the ban (17:34–18:57).

• Systemic Asymmetry: US leverage over IP and supply chains comes with inefficiency — private rights, lobbying, and agency turf wars frustrate cohesive action. China’s centralized system, for better or worse, gets things done.

  • A: “All of it is just a lot less efficient, strategically speaking, than a centralized system that the PRC has where one man decides and then the next day the policy is implemented.” (18:57–20:58)

4. China’s Critical Minerals Response: Warning Shots and Decoupling

(23:35 – 28:32)

• China Announces Export Bans: On key minerals (gallium, germanium, antimony, synthetic diamonds, graphite) vital to electronics and EV batteries.

  • B: “I don’t think it’s a big surprise. It is more of a warning shot to Japan, South Korea, and Netherlands to not follow along with the US.” (24:29–25:25)
  • Cites Japanese resistance (motivated by access for companies like Toyota) to supporting tougher controls. (25:00–25:24)

• Choking Allied Supply Chains: China’s asymmetric leverage is a reminder to the US/allies to speed up efforts for decoupling and resilience.

  • “Again, this is just saying, yeah, you will lose access to it [gallium] if you follow along.” (B, 25:25)

• Limits of Decoupling:

  • Even as the US restricts China, the process of “de-Americanization” and friendshoring remains long and uneven.
  • Reality check: “Much easier said than done.” (B, 26:40)
  • Anecdote: PRC banned critical drone batteries to Skydio, highlighting real supply chain vulnerabilities. (27:00–28:32)

5. PLA/Party System: Opacity and Upheaval

(30:25 – 39:34)

• Key Cases: Financial Times reported PLA Defense Minister Dong Jun under probe for graft, followed by announcement that Admiral Miao Hua (Central Military Commission/political indoctrination) is suspended for “serious violations of discipline” (30:25–30:46).

• Why This Matters:

  • Miao Hua's close Xi Jinping ties and his area (Party loyalty in PLA) make his downfall a “big deal” for elite watchers, but not evidence of a coup or challenge to Xi.
    • B: “Not a sign of a challenge to Xi Jinping or a sign of Xi’s weakness... but it’s a big deal.” (30:46)
  • Corruption in the PLA is so endemic that nothing would surprise seasoned China-watchers.
    • A: “Very difficult to upend that kind of an ecosystem without a lot of pain... basically no PLA or military industrial complex investigation would surprise me, given what she inherited.” (34:11)

• Speculation About US Intelligence: Leak that Dong Jun probe sourced from US raises espionage questions for Beijing (34:58–35:40).

• Opacity and Rumors:

  • Disappearance or vague “investigation” announcements can precede official news by months; denials from Chinese officials are “worthless.”
    • “It’s an unsettling period... something’s up in the PLA, but we just can’t see enough from outside.” (B, 37:26)

• Xi and PLA Tensions:

  • A dismissive attitude to coup rumors, but acknowledges ongoing “roil” inside PLA command.
    • “You really only actually know when it succeeds, right?” (B, 38:59)

6. CEWC (Central Economic Work Conference): Economic Signals and Policy Opacity

(39:34 – 47:19)

• What is CEWC?

  • Yearly December meeting sets priorities for the coming year’s economic policy direction. This year, rumors of changes or stimulus stoke market optimism.

• No November Politburo Meeting:

  • Unusual absence raises speculation about earlier, urgent economic work, but Bloomberg later reports the dates are unchanged—likely Dec 11–12. (40:23–42:17).

• Stimulus Hopes, Social Stability:

  • Any substantial tweaks await the conference’s readout, but hosts are skeptical “significant shift or additional meaningful stimulus” is coming.
  • Recent “lone wolf” attacks and social unrest highlight why stability (not just macro numbers) may prompt leadership action. (43:35–45:02)

• Enduring Opacity:

  • Hosts reiterate that China’s policy process is so opaque, “we don’t know and we’ll have to wait and see.” (45:30–47:19)

7. Trump’s Return: Noise, Questions, and Incoherence for 2025

(47:19 – 61:11)

• Trump Tweets and Trade Policy:

  • On X, Trump posts threats of 100% tariffs to any country pursuing a BRICS currency, asserting "there is no chance BRICS will replace the dollar..." (49:16–50:37).
    • A: “Is that Trump noise or something materially interesting?”
    • B: “Can’t just ignore his tweets as much as you want to.” (49:16)
  • Previous policy ideas seemingly sourced directly from Fox News segments and lobbyists (see fentanyl tariffs; 50:42–51:43).

• No Strategic Clarity:
  – Even Beijing doesn’t have a clear sense of what Trump wants: more purchases? Decoupling? No answers—just more uncertainty. (55:07–55:52)

• Backchannel Diplomacy and Communication Styles:

  • Absence of direct contact between Trump and Xi highlighted, reflecting Chinese caution not to risk surprising Xi in unscripted engagements. (57:50–58:52)

• Predicting Trump Era 2.0:

  • It will be defined by volatility, improvisation, and cognitive dissonance.
    • B: “My base case... is it's going to be important to have cognitive dissonance as you're trying to understand the Trump policies toward China and you probably have to be able to deal with some amount of policy incoherence.” (60:39)

8. Bonus: Chinese “Micro-Drama” and the Culture Wars

(61:19 – End)

• Micro-Drama Crackdown:

  • China’s booming “micro-drama” scene—the 3–5 minute online soap operas—targeted by regulators who want to ban ‘trashy’ tropes and negative portrayals, especially of older women. (61:19–63:47)
  • A: “Justice for mothers-in-law everywhere!”

• Changing Media Consumption Patterns:

  • Conversation on how young people (in China and the U.S.) no longer watch traditional TV, now favoring short-form, algorithm-driven content—raising regulatory and social challenges. (63:59–64:40)

Notable Quotes & Moments

• “If Musk has a voice... would he really pick someone who's going to be especially tough on China?” — Bill Bishop, (07:11)
• “All the lobbyists and the chip firms are going to have a good holiday bonus.” — Bill Bishop, (08:14)
• “If you're going to do it half-assed, it's going to really be a mess. And I think that's where we are.” — Bill Bishop, (02:36)
• “It’s not an honest intellectual debate...if you don’t talk about all the lobbying...to undermine and neuter the controls.” — Bill Bishop, (14:56)
• “It’s going to be important to have cognitive dissonance as you're trying to understand the Trump policies toward China...” — Bill Bishop, (60:39)
• “Very difficult to upend that kind of an ecosystem without a lot of pain... basically no PLA or military industrial complex investigation would surprise me, given what she inherited.” — Andrew Sharp, (34:11)
• “You really only actually know [about a coup] when it succeeds, right?” — Bill Bishop, (38:59)

Timestamps of Key Segments

• [00:24–15:45] — Biden chip controls finalized, analysis, criticism of effectiveness
• [23:35–28:32] — China’s mineral export curbs and global supply chain leverage
• [30:25–39:34] — Rumors, realities, and systemic investigation/corruption in China’s PLA
• [39:34–47:19] — Central Economic Work Conference: expectations, process, and leadership priorities
• [47:19–61:11] — Trump speculation, BRICS/dollar, trade policy unpredictability, communication styles
• [61:19–64:40] — Chinese micro-drama crackdown, modern media consumption

Closing Thoughts

This episode is a masterclass in careful, skeptical reading of U.S.–China policy and political realities, combining deep expertise on China’s inner workings with candid, sometimes irreverent skepticism about Beltway dysfunction and industry self-interest. From semiconductor control dilution to uncertainties of Trump’s return, from PLA purges to Chinese TikTok, and the culture of online content, Sharp and Bishop decode both the substance and the spin for listeners who need to understand China and Washington’s mutual, imperfect maneuvering.

For more detail on semiconductor developments: see the ChinaTalk episode with Greg Allen and Dylan Patel (10:00).