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China’s Huawei, a technology giant that has been facing Western-led sanctions for years, has unveiled its Huawei Mate 60 Promade, a breakthrough development in the ongoing chip war between the United States and China, According to the analysis of TechInsights, the smartphone is powered with a 5G chip Kirin 9000S processor based on the 7nm (N+2) technology. The chip is designed by Huawei’s division HiSilicon and is developed with Semiconductor Manufacturing International Corporation’s (SMIC) N+2 technology. 

Both Huawei and SMIC are Entity List companies. The U.S. Bureau of Industry Standards (BIS) in October 2022 updated the U.S. Entity list that names companies that are scrutinized. For American companies to do business with the listed companies requires a prior license by U.S. government authorities. Experts anticipated a sharp cut in the flow of technology and equipment from the United States to China that will effectively limit China’s growth in the chip industry and throw Chinese chip capability decades behind the United States’ advanced chip capabilities. However, Huawei’s resurgence with a 7nm chip capability raises doubts about the efficacy of Western sanctions among those who discounted China’s capability in microchip manufacturing and now wonder how China has been able to mass produce 7nm leading-edge semiconductor technology despite embargos.

The 2022 October regulations introduced by the BIS clearly stated that “No company should be assisting Chinese companies with below 14-nanometer using American technology.” Huawei’s resurgence with 7nm chip-making capability marks a failure of America’s entity list and licensing regime. One, the companies on the entity list are not the only companies that ensure the flow of equipment to China. Say, if ten companies are enlisted, ten new companies would emerge to ensure an unhindered flow of business with the American suppliers and vendors, which are also looking forward to running a profitable business with Chinese buyers. A host of shell companies have been set up in China to trade with American equipment makers to bypass the sanctions. Second, several companies dealing with American sellers are ultimately routed to SMIC, especially in the wake of October 2023 licensing requirements. In many cases, these companies will attain licenses just to ensure final shipping to SMIC. According to an industry expert, Dylan Patel, licenses are being handed out as candy, and the entity list is not really bulletproof. 

Another loophole lies in understanding the chip development capability within various thresholds on the nanometer scale. American shortsightedness lies in underestimating the capability of Chinese ways of acquiring high-tech with clandestine means. The ban on equipment sales used only for the production of high-end chips never banned the business in equipment and technology used in producing lower-end chips. The Chinese strategy lies in producing the leading-edge chips by repurposing the lagging-edge tools and equipment. For example, a metal disposition tool that is used for a 28 nm chip can also be used in a 10 nm chip.

Also, it is not possible for China today to make 7nm or 14nm chips without external support. Since China’s semiconductor industry is developed sporadically with no company providing end-to-end solutions to producing even lagging-end chips, it's impossible to build a 7nm capability without the support of Western tools, machinery, and software provided collectively by the global players in the value chain. TechInsights in their hardware analysis also revealed that SMIC has access to sophisticated EDA tools that they are not supposed to have. The anticipation that banning China’s access to Dutch ASML’s advanced lithography tools would render China with no facility to implant circuits on silicon wafers turned ineffective. The DUV tool 1980i was used by both TSMC and Intel in their production of 7nm chips. The same tool can be shipped to China which can be used by the Chinese manufacturers for 7nm or even 5nm chips. Equipment distribution companies like Applied Materials, Tokyo Electronics, Kokusai, Lam Research, ASM International, etc. have been selling equipment for 28nm chips to China, which can also be used for the production of 7nm chips.

Huawei’s Kirin 9000S processor is similar to Intel 10 which was renamed to Intel 7. According to American experts, the technological equipment that was used in the production of Intel 7 was not restricted from being shipped to China under the export control regime. Also, specific restrictions are built around equipment devices that lie under a particular threshold. For example, restrictions of EDA (a chip designing software) tools are imposed only for 3nm chips. That means specific equipment used for above 5nm chips can still be accessible to the Chinese, and especially to various Chinese shell companies that have proliferated to skirt sanctions. The Chinese have exploited the grey areas in the export control measures that hardly considered that the equipment being sold to the lagging-edge buyers can also be used by the leading-edge manufacturers. This policy loophole is very clear and having this ignored by regulators clearly reflects a lack of policy insight.

Also, there’s doubt about how deep political will is among allies like Japan, the Netherlands, Germany, and South Korea to restrict the flow of their instruments to China, which is one of their largest markets. If the Netherlands is selling spare machine parts to China, will they not retrograde an outdated tool with a better tool to bypass the rules and carry on their business with China? Thus, blind negligence to regulatory restrictions or the support provided by other countries has also contributed to China getting material supplies.

China’s successful launch of a 5G-powered device with 7nm technology reveals that Western regulators have failed to understand the intricacies of semiconductor manufacturing and simply anticipated a completely restricted flow of technology to China with a bunch of export control regulations. It was a strategic mistake of policymakers and pundits who underestimated China’s perseverance in pursuing trial-and-error methods and well-known competence of acquiring talent, technology, and tools through back channels. As the applied rules were practically irrelevant, Huawei’s 7nm capability is not even a breakthrough, rather it came as a surprise due to the repeated lack of determination by American policymakers to see it through. The stated loopholes in the regulations not only enabled the Chinese manufacturers to source exactly what America did not intend to but rather helped in spurring a wave of indigenous manufacturing capability in the chip segment.

Megha Shrivastava is a Dr. TMA Pai Fellow and a Doctoral Research Scholar at the Department of Geopolitics and International Relations, Manipal Academy of Higher Education, India. Her work focuses on China’s ICT industry. She also writes on the semiconductor industry and the U.S.-China technology conflict.

Image: Karlis Dambrans / Shutterstock.com

 

Although demographic policy has long been discussed at an international level, family policy has typically been viewed as a domestic policy concern. Yet it is becoming clear that this field—a way of orienting national legislation toward fostering and defending family life—provides an alternative value basis that is drawing increasing interest in international relations. Indeed, elements of a quiet consensus on family policy are beginning to take hold among countries that want to strengthen their societies.

Family Policy as a National Interest

In recent years there have been two alternative approaches to managing demographic challenges within countries. One approach emphasizes the free movement of peoples as an overall win-win: “Rich, aging countries need workers,” as a 2010 New York Times report put it, while “people in poor countries need jobs.” A few countries, however, have begun to follow the other approach of family policy, whereby national governments incentivize domestic population growth and encourage talent retention.

Family policy has not typically been viewed as a matter of international affairs. Contemporary international institutions have been largely oriented toward advancing a liberal understanding of sexual freedom, particularly through international norms such as the Beijing Declaration and the Istanbul Convention. The Biden administration has trumpeted its global prioritization of LGBTQ issues “through U.S. diplomacy and foreign assistance,” and EU institutions have done the same.

Developments in family life have reflected the same shift in recent decades. During the second half of the twentieth century, global birth rates fell while expectations around industrial capacity increased. International efforts at managing population growth were common, especially through promoting the use of birth control. In the aftermath of the Cold War, the theme of global discussions shifted toward breaking down international barriers—from borders to glass ceilings to norms around marriage and family.

In retrospect, it is clear that the post-1990 consensus had a demographic thesis embedded in its foreign policy; one of global mobility under a soft regime of social liberalism. With the advent of the Schengen Area, Europe became a model of how free-trade areas and shared economic zones could lead to the free movement of peoples. It no longer mattered where things were made. Classical family structures were likewise viewed as restrictive.

But the traditional family has returned to international discussion. First, economists such as Charles Goodhart and Manoj Pradhan have pointed out that societies with low birth rates are aging societies. Aging societies tend to become industrially sclerotic and experience intergenerational tensions. Industry must shift toward medical care, and economies can become inflation-prone. Yet declines in family formation seem to be common across all industrial societies, outside of certain highly-religious subgroups. For this reason, measures supportive of family life ought to have broad consideration in international discourse.

Second, the values that promote family formation are no longer taken for granted. Western societies have steadily moved away from a classical definition of the family. Western governments, as well as popular culture, have also placed greater emphasis on defending and even celebrating alternative lifestyles than on the classical definition of the family.

With each passing year, it becomes clearer that demographic challenges lie at the heart of international affairs as well. A report from the New York Times this summer highlighted the fact that, “By 2050, people age 65 and older will make up nearly 40 percent of the population in some parts of East Asia and Europe.” In these aging societies, working-age populations will shrink, while “the best-balanced work forces will mostly be in South and Southeast Asia, Africa and the Middle East.” The geopolitical and geoeconomic consequences of this shift are only beginning to be envisioned.

In light of reports like this one, at the European Council meeting this past summer heads of state requested that the European Commission develop a “Demographic Toolbox,” citing in particular the relationship between demographic strength and economic competitiveness. The reason is fairly simple: governments around the world are beginning to realize—both individually and in common—that demographic challenges won’t be helped by putting further pressure on traditional family structures or by further encouragement of mass migration.

It is in this context that, in recent years, “family policy” has emerged as a nationally oriented approach to managing demographic challenges. In my view, family policy is built on three pillars: 1) a state support system linked to the family and incentivizing family life; 2) protection of and promotion of the traditional family as integral to the functioning of society; 3) rejection of mass migration and emphasis on the integrity of borders and an orderly approach to immigration. Together, these three elements are aimed at bolstering the role of the family within society.

All large economic structures have the ability to, and are designed to, shift incentives around life choices. When state support and welfare systems are not tied to family structures, the system itself can come to take the place of fathers. Contrast this with Hungary, where the family support system built since 2015 is designed to make the choice to start a family more financially beneficial than the alternative. Mothers receive their full salary for an extended period after the birth of their child, parents can apply for large loans and grants to cover the cost of setting up a household, and a variety of other financial incentives are in place to encourage family formation. This suite of policies has drawn broad foreign attention: the recently concluded fifth Budapest Demographic Summit included official representation from the governments of Italy, Bulgaria, Serbia, Tanzania, Kazakhstan, Türkiye, Qatar, Bahrain, Tunisia, and Ecuador. In recent years, former U.S. vice president Mike Pence as well as official representatives from Czechia, Slovakia, Slovenia, Romania, and Latvia and elsewhere have also attended. The Polish government has also introduced family support policies in recent years, as well.

The International Implications of Family Policy

Although family policy is currently pursued at a national level, each element of family policy has potential international repercussions. For this reason, it has all the elements of an alternative international consensus. But because existing international structures are oriented against strong border policies and interpret human rights institutions against domestic pro-family policies, this phenomenon has not fully reached international visibility.

Will the global geopolitical order shift in such a way as to allow the emergence of international mechanisms for promoting family policy on these lines? The post-1990s global order was built on a unitary package of American-led military security, economic opportunity (through expanding free-trade facilities), and a liberal interpretation of ever-expanding human rights. But with the rise of non-Western-led economic organizations and with an ever more aggressive Western approach on sexual lifestyles, the incentives for a “multi-vector” foreign policy are rising. In that environment, states have a stronger mutual rationale for sharing good practices with regard to the promotion of stable family life, even where they differ in other respects.

The reality is that the overall package of a country’s demographic policies is now of immense importance in the international context, given that many states are facing similar challenges. But instead of waiting for the European Union to create a “Demographic Toolkit,” the basic elements of family policy already exist—and are needed in different respects in different parts of the world.

In Europe, the mass migration experienced since 2015 has not been followed by increasing social cohesion; meanwhile, the key elements of strong family life have continued to decline. Since the turn of the century, illegitimacy rates have risen by nearly 70 percent, so that 42 percent of births in Europe are now outside wedlock. During the height of the migration crisis in 2015, EU leaders confidently predicted that the arrival of three million migrants would bring an economic benefit to Europe. Instead, the European economy now looks more sclerotic than at any point in recent years.

While the United States—itself unique due a long history of processing and assimilating immigrants, along with well-developed immigration-related institutions—has maintained population growth through immigration, current circumstances with millions of border crossers per year seem unsustainable. At the same time, cultural and economic pressures on American families have made family life less attractive for the young.

Even among the rising countries that will soon lead the world in working-age population—like South Africa, India, or the Philippines—family policy will be necessary to maintain a strong social structure and avoid following the path of aging Western societies.

Now that the “package” of the post-1990s global order is becoming unbundled, it is no surprise that the world is becoming more polarized, not more liberal, in terms of attitudes toward socially liberal family structures. As Western societies have progressed beyond twentieth-century norms to become more aggressive in promoting alternative lifestyles, even through diplomatic channels, some governments have quietly grown more skeptical. Many countries in Central and Eastern Europe, the Middle East, Central Asia, and Latin America benefit from Chinese investment yet, from the Western side, feel only pressure to change their fundamental cultural values.

The arrival of demographic policy as foreign policy is also a sign that the “values” identified at the heart of the existing global order are considered by many global actors to be insufficient to power it. With the West trying to step back from fully integrated global markets—sanctioning its geopolitical opponents and “de-risking” from trade with China—the reasons for accepting the “values” part of the Western package have also begun to decline. Countries will have to evaluate whether their demographic position requires economic development to meet a rising population, financial incentives to rescue a falling population and, in conjunction with this, other types of cultural and legal support for traditional family structures.

A Turning Point?

The most interesting question concerning the international aspect of family policy is whether it could constitute a new element for a “values-based” international policy. Is public support for robust family life sufficient to bring countries together that otherwise diverge? From the standpoint of classical geopolitics, where conflict over resources and territory defines international relations, the answer is “No.” Countless wars and conflicts have occurred between countries with robust demography.

Yet stable family life can no longer be taken for granted in international relations. In modern societies, family life is not simply an assumed input into social strength, economic growth and military readiness, but an output of favorable culture, protective legislation and sound policy. With global markets still highly integrated, a steady collapse in demography in one area—either through aging, family collapse, or mass migration—can cause immediate problems in another. And if a country’s economy becomes more sclerotic through demographic decline, its value as an export market or industrial provider is likely to fall, as well.

Finally, there is another reason that a strong, values-oriented family policy can go along with a flexible or more pragmatic interests-based foreign policy: a strong family policy enables economic growth and increases overall confidence, which together provide more room for maneuver in foreign policy. A country with a strong national culture and growing families need not fear that economic exchange and partnerships will undermine it.

How could a new consensus favoring family policy as a core element of international affairs come into being? Looked at from the standpoint of existing international institutions, the situation might seem rather challenging. But global institutions are also now at an inflection point. With new economic arrangements like the BRICS+ coming into view, it remains to be seen what set of values might be attached to institutions eventually built out of them. Yet it is entirely likely that values will return to international institutions in unexpected ways. As countries face many upcoming demographic challenges, there will be strong incentives for them to create new platforms through which to hash out good policy practices. In the meantime, the tight bundle of post-Cold War international policy will likely have fallen further apart. When that moment comes, it won’t be surprising if attention turns toward family policy. In the coming decades, family policy will not merely be an answer to domestic demographic challenges, but a core part of a functioning global order.

Gladden Pappin is president of the Hungarian Institute of International Affairs.

The views expressed in this article are the writer’s own.

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