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June 24-30, 2019

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YASU OTA Nikkei Asian Review columnist SEPARATION A tariff spat is rapidly transforming into a technology cold war. ANXIETY But can anybody win?

WE MUST WE ARE ALWAYS NOW BE THE EMBARKING LEADER IN ON A NEW EVERYTHING LONG WE DO, MARCH, ESPECIALLY AND WE WHEN IT MUST COMES TO START THE VERY ALL OVER EXCITING AGAIN WORLD OF TECHNOLOGY

U.S. President Donald Trump Chinese President Xi Jinping

8 9 Reuters ON THE COVER Guiyang, in the rural province of Guizhou, has hosted China’s International Big Data Expo since 2015.

GUIYANG, China/TOKYO/HONG KONG/PALO ALTO, U.S. The mountainous region of Guizhou has long been the poorest EVEN IF THE U.S. WANTS TO of China’s 31 provinces, known mostly for producing a few herbs used in traditional Chinese medicine, and maotai, a popular dis- BUY OUR PRODUCTS, I MAY tilled Chinese liquor. Its gross domestic product per capita was NOT SELL TO THEM $6,233 in 2018, less than one-third of ’s. Ren Zhengfei CEO But Guiyang, the provincial capital city of 4.6 million people, has grand ambitions to transform itself into China’s newest digi- tal hub. Its goal is neatly summed up by a three-character Chinese word, dashuju, or “big data,” and residents are unlikely to forget it. Dashuju is plastered all over the city: There is the “Plaza of Dashuju,” the “Human Resource Center for Dashuju,” “Dashuju Park” and even “Dashuju Apartments.” Guiyang’s leaders are hoping that this focus on big data -- the backbone of next-generation 5G mobile and cloud computing ser- vices -- will make the city a stronghold for Beijing’s Digital Silk Road strategy. And while its remote geography has been one of the reasons it has remained so poor for so long, it offers some dis- tinct advantages in the data business. The ample water resources nearby will provide plenty of cheap hydropower to run giant Getty Images computer servers, while the mountainous region’s steady climate will help keep them cool. “The biggest data centers in China are being built in the area Asked about the city’s digital ambitions, Li demurred. “We, logical supremacy, one that some say could draw a “digital iron World, Two Systems.’” by giants in the digital industry,” said Li Haibo, director of the government officials, cannot talk about the dream; we can only curtain” between Apple and its Guiyang operations. Such dire predictions have stemmed from the U.S. decision International Cooperation Promotion Center of Guiyang High- talk about [how to] plan and execute it.” As chairman of Taiwan’s Hon Hai Precision Industry -- better under President Donald Trump to ban American companies Tech Industrial Zone. Two of the world’s leading tech companies, But Guiyang’s dream -- and Apple’s business opportunity -- known as Technology Group -- Terry Gou has played a from doing business with Huawei Technologies, citing a threat Holdings and Apple, are among them. represent the sort of U.S.-China technological partnership that major role in the intertwining of the U.S. tech industry and man- to U.S. national security. If the ban holds, it effectively starves Apple broke ground on a $1 billion data center in Guiyang in has thrived for years, and which now faces an almost existential ufacturing in mainland China. His company has been the biggest one of China’s technological success stories from components May 2018, with the project expected to be completed next year. threat. What began as a tariff spat between the U.S. and China production partner for Apple’s iPhone, but now he sees the trade that are essential to its business. On June 17, Huawei said it The U.S. tech company plans to combine its iCloud computing now appears to be morphing into a nationalistic battle for techno- war unwinding these close ties. had slashed its sales expectations for the next two years by $30 service with the one operated by the provincial government, al- “In the future, there will be no G-20, but only G-2 -- the U.S. and lowing it to provide storage services to China’s enormous market China,” said Gou. Huawei tops world 5G patent ownership of 1.4 billion people. Apple plans to eventually expand its offer- “The world will have to live with the two [technology] stan- Key owners of standard essential patents ing to nations participating in China’s Belt and Road Initiative, HUAWEI IS VERY DANGEROUS dards, created by the U.S. and China separately after the two big (by number of patent families) according to Li, who is overseeing Guiyang’s data center push. powers’ fierce competition. ... It’s likely that it will become ‘One U.S. President Donald Trump Huawei Technologies (China) 1,554 * (Finland) 1,427 Samsung (South Korea) 1,316 America’s exposure LG Electronics (South Korea) 1,274 (China) 1,208 S&P 500 companies ranked by share of revenue from China ZTE (U.S.) 846 (in percent) Ericsson (Sweden) 819 Qualcomm 64.7 1 (U.S.) 551 2 Micron Technology 57.2 China Academy of Telecommunications 545 3 Qorvo 55.0 Technology (China) 4 Broadcom 48.0 (Japan) 468 5 43.1 Sharp (China) 207 Intel 25.9 14 As of April 2019 Apple (U.S.) 12 17 23.2 Covers top 27 companies owning 5G standard BlackBerry (Canada) 9 Figures based on latest fiscal year results; where country-level data essential patents 121 unavailable, revenue calculated using a proprietary FactSet algorithm Source: FactSet *Including Alcatel-Lucent Other Source: IPlytics

10 Nikkei Asian Review June 24-30, 2019 Read more at asia.nikkei.com 11 ON THE COVER

billion due to the Trump ban (see related story on page 26). the rollout of 5G mobile communications technology, monopo- Chinese President Xi Jinping has compared the tech conflict lizes the global telecom infrastructure, the U.S. argues. IN THE FUTURE, THERE WILL with the U.S. to the Red Army’s “Long March” under Mao in the China’s internet security and national security laws make it 1930s -- which many observers say indicates that the country is mandatory for businesses to submit information to the govern- BE NO G-20, BUT ONLY G-2: girding for a prolonged battle. ment when deemed necessary. Ren said in an interview with the THE U.S. AND CHINA. ... IT’S “Even if the Chinese tech industry is not ready, we will have Nikkei Asian Review in January that he would refuse to submit no choice but to take the ‘new Long March,”’ said Wang Huiyao, information even if requested by the government. In reality, how- LIKELY THAT IT WILL BECOME president of the Center for China and Globalization, an indepen- ever, he simply cannot. ‘ONE WORLD, TWO SYSTEMS’ dent think tank in Beijing. “The Chinese tech industry is at a Trump’s attacks on Huawei fit with his “America First” Terry Gou Chairman of Foxconn critical moment and we can’t just sit and watch it die. campaign theme, and his broader accusations that We used to rely on global suppliers, letting other China has been “ripping off” the U.S. for de- countries do what they can do the best. Now, cades. But U.S. suspicion of Huawei predates Foxconn Chairman Terry Gou, center, has played we will have to build our own supply chain.” the Trump administration: In 2008, the U.S. a major role in linking the U.S. tech industry and

blocked Huawei’s attempt to buy a stake in manufacturers in mainland China. Getty Images BIPOLAR WORLD Huawei has roots in U.S. rival 3Com on security grounds. Guizhou. The company’s founder, Ren The U.S. administration’s bashing Zhengfei, migrated from Guizhou of China has also proved popular with panies on both sides of the Pacific. “Many of my clients -- espe- technology development and new adoptions [to occur] more to , Guangdong American lawmakers and citizens, whether cially the ones in Huawei’s supply chain, or companies in the quickly,” said Lu. Province, and set up Huawei they are Republicans or Democrats. And, business of high-tech -- are postponing their plans to expand to there in 1987. For him, the tech war has be- though there is support for the Trump ad- the U.S., or cutting budgets,” said one business consultant based VALUE OVER POLITICS The fear is that a tech cold war, split- come a personal matter: Meng Wanzhou, Ren’s ministration’s attempts to enforce intellectual on the U.S. West Coast. ting the world into China- and U.S.-led spheres, could end the daughter and Huawei’s chief financial officer, property rights in China, U.S. businesses -- espe- Trump’s executive order has disabled Huawei from gaining benefits that have come from having global standards for com- was arrested in Canada last December as part of a cially in the tech industry -- worry about the adminis- to updates of ’s Android mobile ponents. But it is far from clear how these divi- probe related to alleged attempts by Huawei to sell U.S.- tration’s barefisted approach. operating system, and from procuring parts sions would be drawn. For a start, the attitudes made equipment to Iran in violation of sanctions. To counter the U.S. moves on Huawei, Xi has suggested im- made by Qualcomm, the market leader for of Asian nations located in the area covered by The U.S. claims -- without providing much evidence publicly posing restrictions on exports of rare-earth elements, which are telecom modem chips. Mobile carriers in Japan China’s Belt and Road are not as predictable as -- that the use of Huawei and telecommunications indispensable for American high-technology companies, and have complied with the Trump administra- Washington may have expected. equipment results in the leakage of information to the Chinese announced a plan to ban the overseas transfer of advanced tech- tion’s requests by halting the procurement of “Huawei’s research is far bigger than government. Chances of such espionage risk will increase if nologies from China. telecom equipment from Huawei and postpon- $ bn Malaysia’s capability. We try to make use of their Huawei, which is leading American and European companies in The uncertainty is already having an effect on high-tech com- ing sales of its new P30 series smartphones. 30 technology as much as possible,” Malaysian Australia and New Zealand have also halted Huawei's estimated Prime Minister Mahathir Mohamad said in his the government procurement of equipment revenue hit address to the annual Future of Asia conference from Huawei. hosted by Nikkei in Tokyo in late May. China's big tech exposure (number of international projects of 12 major companies) Source: Huawei Against an increasingly tense backdrop, Pichet Durongkaveroj, Thailand’s minister By company 0 200 400 600 800 By type 0 200 400 600 800 Trump and Xi agreed in an emergency telephone of digital economy and society, told the confer- conversation on June 18 to meet face-to-face on ence that the country would not join the camp Huawei Research partnership, R&D lab the sidelines of the Group of 20 summit, to be held in Osaka in late to exclude Huawei, saying, “Bangkok is friendly to players of all China Telecom Telecommunications, ICT** June. In the run-up, discussion is rising as to whether a technol- countries.” ZTE Overseas office, subsidiary ogy “cold war” will result in a bipolar world: one where separate Other Southeast Asian countries are also unlikely to side with Data center digital policies and standards will divide the Chinese and U.S. the U.S. in shutting out Huawei. Even South Korea, an ally of Cable (including leased) spheres of influence. the U.S., has not clarified its stance, possibly because of pressure Tencent MoU†, investment, joint venture Lu Fang-Ming, chairman of Asia Pacific Telecom, Foxconn’s from China. Asia, therefore, is not as clear-cut as the U.S. may telecom unit, said previous generations of mobile technology have thought. WuXi AppTec Smart cities, public security were built along a variety of standards, but 5G is different. If the One thing is clear, however: In areas where Huawei is already (controlled by CETC) 5G network China-U.S. tensions reversed that, it would be a setback for the used, telecom infrastructure costs are lower than where it is not. Alibaba facility industry, he said. In the 5G market, Huawei leads its rivals Ericsson and Nokia in BGI “5G is the very first time that, so far, the world agreed to price and technological competitiveness, and is set apart by its Data as of June 14 CETC* *China Electronics Technology Group only one [mobile technology] standard, but we don’t know aggressive management style. **Information and Communication Technologies Baidu †Memorandum of Understanding whether that will change after all these tensions. ... I person- Some countries are “fine with potential security issues, if the Source: Australian Strategic Policy Institute ally believe open sources and a common standard really help price is right,” says Jeffrey Towson, a private equity investor and

12 Nikkei Asian Review June 24-30, 2019 Read more at asia.nikkei.com 13 ON THE COVER

Huawei’s overseas reach (international projects, by type)

432 Research partnership, R&D lab

92 Telecommunications, ICT*

71 Smart cities, public security 69 Overseas office, subsidiary 45 Cable 30 5G network Data as of June 14 20 MoU**, investment, joint venture *Information and Communication Technologies 7 Data center **Memorandum of Understanding Manufacturing facility Source: Australian Strategic Policy Institute 3 Getty Images

professor of investment at Peking University in Beijing. “They are Meng Wanzhou, Huawei’s chief financial officer more interested in getting a modern telco network at a great price. and daughter of the company’s founder, leaves court following a hearing in Vancouver in May. In these nonsensitive markets, Huawei should be very successful.”

DIGGING IN IN SHENZHEN The mood in Shenzhen, known technology-based economy,” he said. as “China’s Silicon Valley,” has changed dramatically since May. Some of China’s main tech partners in the region are standing “Shenzhenians have been strengthening a sense of unity and emo- with it, at least for now. Taiwan Semiconductor Manufacturing tion of nationalism, feeling that Shenzhen is being attacked by the Co., the world’s largest foundry, announced in May that it will U.S.,” said an information technology consultant, who frequently continue shipments to Huawei, saying that it has concluded it shuttles between the city and Tokyo, on condition of anonymity. won’t breach the export ban as long as U.S.-derived technology Some in the West have held out in the belief that the trade pres- accounts for less than 25% of the product value. South Korea’s sure can change China’s political, economic and industrial struc- SK Hynix and of Japan apparently intend to keep supply- ture. The reverse may, in fact, be true. Pressure from the U.S. “is ing semiconductors. Containing China in the digital sector, where the driving power uniting Chinese tech companies to reinvent the supply chains have diversified, appears far more difficult than wheel and break free from ... [Google’s] Android, Qualcomm or banning Iranian oil imports. Intel,” said a venture capitalist based in Shenzhen. Back in Guiyang, Apple has little choice for now but to con- Unlike ZTE, which was driven to the brink of collapse due to a tinue work on its data center project according to rules set be- U.S.-imposed trade ban, Huawei has its own semiconductor sub- fore Trump’s tech war. This includes complying with China’s sidiary, HiSilicon. Huawei is likely to be able to develop its own law that foreign companies, like Apple, must partner with local operating system, one that would look like Android. Chinese companies to build the facilities they need to host data Beijing’s “” initiative was launched to re- in the country. duce its dependence on foreign suppliers of semiconductors and But Apple can also feel confident that, should China halt the other key technologies. But Paul Triolo, head of geotechnology data center joint venture as retaliation for Trump’s attacks, it research at U.S.-based research firm Eurasia Group, is skeptical would likely hurt the Chinese partners more than Apple. This about China’s ability to achieve technological independence. dynamic may well be what heads off a tech cold war, notes the China, he says, “will remain heavily dependent on U.S., Japanese, strategy consultant working with tech companies on both sides and European suppliers, and on Taiwan for the fabrication of of the Pacific. cutting-edge chips,” he said. “Trump needs a trade deal more than Xi does. So, if there is The belief in Beijing that the U.S is lowering a “digital iron cur- going to be a tech cold war, it might be more likely to be initiated tain” between the two countries is prompting an even more in- from the China side,” he noted. “But, given China still has a long tense focus on becoming self-sufficient, Triolo notes. But he says it way to go in terms of competing with the U.S. in technology de- is “simply not possible for China to completely disengage” from velopment, I don’t think that would be a logical move.” global supply chains. “The reality is that no country can become self-sufficient in Nikkei staff writers Cheng Ting-Fang and Lauly Li in Taipei, Coco Liu the technologies needed to maintain and develop a modern in Hong Kong and Yifan Yu in Palo Alto contributed to this report.

14 Nikkei Asian Review June 24-30, 2019 BUSINESS POLITICS & ECONOMY Hospital giant IHH looks Youth suicide: Asian teens crack to India and China for growth page 16 as birthrates fall and stress rises page 32

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Sept. 16-22, 2019

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SHENZHEN/SHANGHAI/TAIPEI In the first few weeks of 2019, 20 engineers from Huawei Technologies arrived in the riverside town of Jiangyin in eastern China on a secret mission. They took up stations at the state-backed Jiangsu Changjiang Electronics Technology, China’s largest chip packaging and testing company, where they went to work upgrading the facilities and increas- ing the site’s capacity, ahead of a production surge in the autumn. “These Huawei staff are on-site almost seven days a week, from day to night, nitpicking and re- viewing all the details ... demanding strictly that the local company meets global standards as soon as possible,” one chip industry executive familiar with the situation told the Nikkei Asian Review. “It’s honestly like preparing for wartime.” All across Asia, companies in the computer chip industry were receiving similar messages from Huawei: Boost your production, and we will buy your product. In a slowing global market, Huawei made a commitment that was impossible to resist: The company guaranteed up to 80% utilization rates for the next two years to potential and current suppliers. Spooked by the arrest in December 2018 of its chief financial officer, Meng Wanzhou -- daughter of the company’s founder and CEO, Ren Zhengfei -- and anticipating an escalation from the White House, Huawei activated a plan to decouple itself from its U.S. suppliers by pushing fellow Asian companies to speed up and scale up. By May, when the U.S. announced strict new lim- its that all but prevented American companies from selling technology to Huawei, the Chinese telecom giant was already on a war footing. Others in China have followed its lead, preparing to move wholesale away from their reliance on U.S. technology in what could become a permanent “de-Americanization” of the Chinese tech industry. “We see a clear trend of Chinese companies de- coupling from U.S. suppliers,” said Scott Lin, senior vice president of WPG Holdings, the world’s big- gest semiconductor distributor. “After all, no one An engineer stands under a 5G base station antenna testing system at Huawei’s wants to be suddenly cut off from supplies.” Songshan Lake Manufacturing Center Now that these plans are in motion, Lin said, in Dongguan, China. “there is no turning back.”

8 9 ON THE COVER

Globally, Huawei is

WARNING SIGNS Ren, a former engineer statements by American lawmakers and was found to have NO.in telecom gear sales from China’s People’s Liberation Army, intelligence agencies alleging that the sold equipment to 1 founded Huawei in the southern industrial Chinese company presented an espionage Iran in defi ance of

city of Shenzhen in 1987. From its roots as a Reuters risk. Later that year, the government barred sanctions. ZTE had tiny manufacturer of networking switches, any public institutions, including the mili- been under investi- NO. the company has grown to become a global tary, from using Chinese-made equipment. gation since 2012, in shipments2 leader in telecom and a national champion Huawei Chief Financial Officer Meng Wanzhou, In May this year, the White House but the escalation in China. Huawei is now the world’s larg- arrested in December 2018, leaves her family moved to cut Huawei off from its American spurred Huawei home flanked by private security in Vancouver est supplier of telecom equipment, with suppliers. Huawei was put on the U.S. to formulate a con- on May 8. operations in 170 countries. In 2018, it over- Department of Commerce’s “Entity crete contingency inNO. chip design, servers and storage hardware5 took Apple to become the world’s second- List,” blacklisting it for U.S. companies. plan, sources told biggest smartphones manufacturer. It now chips; Skyworks Solutions and Qorvo pro- Qualcomm, Micron Technology, Texas Nikkei. As soon as Source: IHS Markit, IDC, Digitimes Research employs 194,000 staff, with annual revenues vide high-end radio frequency technology; Instruments, Qorvo, Lumentum Holdings, Meng was arrested of more than $105 billion -- comparable Synopsys and Cadence Design Systems Synopsys and Cadence Design Systems, as in Canada, the with Google’s parent company, Alphabet. provide chip-design tools; Google and well as Google -- whose Android operat- company began to That size makes it a huge market for supply software. Further down ing system Huawei uses -- all confi rmed stockpile key components and to qualify suppliers of components and software. the supply chain, chemical companies such that they would have to stop working new suppliers. Huawei’s annual procurement budget is as Applied Materials, Corning, 3M and with Huawei. Some later resumed limited around $70 billion. The company spends Dow Chemical sell their products into other shipments. In August, the Department of DE-AMERICANIZATION For years, $15 billion every year on semiconductors enterprises that help Huawei to develop ad- Commerce added a further 46 Huawei RichWave, a little-known Taiwanese maker alone; only Apple and vanced panels and build semiconductors. affi liates, including more than 10 key re- of Wi-Fi front-end modules -- an important spend more. In 2018, it bought more than Huawei’s scale, and its links to the search facilities, to the blacklist. The sanc- piece of communications technology 200 million displays and hundreds of mil- Chinese state, have long been a cause for tions were designed to cripple Huawei’s within smartphones and other devices -- lions of camera lenses. concern in the U.S. The company has had ability to compete and to innovate. has been trying to engage with Huawei. A lot of those components come from the three bids for American tech companies “Huawei is at the center of the U.S.-China RichWave competes with far larger U.S. In 2018, Huawei procured $11 billion blocked by U.S. authorities on national se- tech cold war primarily because of concern American rivals, such as Skyworks, Qorvo worth of goods from American suppliers. curity grounds -- 3Com in 2008, Motorola’s over the fi rm’s dominance, globally, of and Broadcom, all of which have success- Qualcomm, Intel and Texas Instruments wireless infrastructure unit in 2010, and next-generation wireless technology,” said fully negotiated their way into Huawei’s supply Huawei with various types of 3Leaf Systems in 2011. In 2012, a report by Paul Triolo, the head of geotechnology re- supply chain. RichWave, though, just the U.S. House Intelligence Committee al- search at consultancy Eurasia Group. could not get certifi ed as a supplier. leged that Huawei was spying on American If the plan was to slow Huawei’s tech- This summer, the company suddenly It’s honestly like enterprises in an attempt to gain access to nical progress, it may have backfi red. In- got the green light from Huawei. It began preparing for wartime advanced technology. The company has stead, it appears to be accelerating China’s shipping products in August. consistently denied the allegations. desire to develop homegrown alternatives “Our relationships with this Chinese A chip industry executive Things escalated after U.S. President to American technology. client just skipped the traditional business on Huawei’s production surge plans at supplier Changjiang Electronics Technology Donald Trump took offi ce. In January Huawei had anticipated the Americans’ engagement process and jumped to direct 2018, the largest carrier in the U.S., AT&T, game plan. In March 2016, the U.S. gov- replacement [of other suppliers],” said dropped plans to sell Huawei’s fl agship ernment put ZTE, another Chinese tele- Kick Huang, RichWave’s general man- Mate 10 smartphone, following public com company, on the Entity List, after it ager for China. “And we are not the only

The rise and Ranking by market share Annual shipments Market share by shipments 2012-18 change rise of Huawei (by shipments) (in millions of units) (in percent) 1 400 607% growth 50 2012-18 change Huawei 2 Up 10.7 percentage points Apple 3 300 40 4 Samsung 5 200 20 6 7 100 10 8 9 0 0 2012 ‘14 ‘16 ‘18 Q2 2012 ‘14 ‘16 ‘18 2012 ‘14 ‘16 ‘18 Q2

Illustration by Eric Chow Source: IDC ‘19 ‘19

10 Nikkei Asian Review Sept. 16-22, 2019 Read more at asia.nikkei.com 11 ON THE COVER

Up to

Utilization rate*% promised80 by Huawei benefi ciary in this trade war.” utive with direct knowledge of the trials are spreading. This to secure suppliers Huawei P30 Pro: COVER GLASS, GLASS DISPLAY-RELATED ASSEMBLY Huawei’s outreach to Chinese and other told Nikkei. The Chinese company began year, , an- *Over the next two years BACKING, METAL FRAMES PARTS Source: Industry sources sum of its parts Flex (U.S.) Asian suppliers has been far-reaching. to put several of those designs into mass other leading smart- U.S. component makers have supplied Corning (U.S.) OLED PANELS Suspended shipments in May; Nikkei has learned that alongside Jiangsu production in the spring of 2019. phone supplier, has critical parts for Huawei phones. Here’s Lost supply share to Lens BOE Technology was accused by Huawei how that’s begun to change Changjiang Electronics Technology, other “It’s not like most outsiders think -- [that] invested in sev- Technology (China) of detaining assets leading chip assembly and testing provid- Huawei only started to develop those cru- eral local chip-related companies, includ- Lens Technology (China) LG Electronics FIH Mobile (Taiwan) Key supplier of screen glass (South Korea) ers, including ASE Technology Holding, cial RF parts after the supply was cut off,” ing Bluetooth and audio chip startup OPERATING SYSTEM Subsidiary of Foxconn; among to Samsung and Apple assemblers gaining market Siliconware Precision Industries, Powertech the executive said. “The quality and per- Bestechnic, and design service provider TOUCH MODULE Google Android (U.S.) (China) share at Flex’s expense Technology and King Yuan Electronics formance may not be 100% as good as [U.S. VeriSilicon Holdings. Supports Gmail, YouTube, etc.; BYD O-Film Tech (China) Also longtime assembler Huawei’s proprietary Harmony OS has been BYD (China) all received the nod from Huawei to ex- supplier] Skyworks; but it is workable, and Holding also unveiled its own artifi cial CHIP developed to replace Android, but a of Huawei phones Also gained market share from (China) pand their production inside China, as did maybe users won’t feel a big difference.” intelligence chip platform, based on open- near-term rollout appears challenging Goodix Flex Many second- and third-tier suppliers, printed circuit board makers Unimicron source technology, in July. Wingtech Technology (China) Technology. who previously would have had no chance “Huawei is the most obvious and ag- CAMERA-RELATED PARTS Taiwan Semiconductor Manufacturing to enter Huawei’s supply chain, have now gressive case,” WPG’s Lin said. “But it is LENSES Co., the world’s biggest contract chip- been handed a once-in-a-lifetime opportu- not the exception.” Largan Precision (Taiwan) AUDIO PARTS, INCLUDING MICROPHONES, SPEAKERS Also a key Apple supplier maker, has been asked by Huawei to put nity to move up the ladder, Roger Sheng, AAC Technologies (China) new customized chips into production a veteran tech analyst at consultancy REAL IMPACT Even as prepared as it Kantatsu (Japan) (China) Owned by Foxconn-controlled Sharp (Taiwan) with the aim of Gartner in Shanghai, said. The shift away was, Huawei has been hurt by the U.S. Merry Electronics (China) replacing chips from American manufacturers may outlast attacks on its supply chain and its cus- China’s biggest smartphone-lens BATTERY PACKS from Intel and the trade war, he added: “Even if the U.S. tomer base. The U.S. has been lobbying its maker More than Desay Battery (China) Xilinx, sources later allows Huawei to use American com- allies to try to restrict Huawei’s markets, CMOS IMAGE SENSORS Sunwoda (China) familiar with the ponents, it’s never going to go back to the and the constant neg- Sony (Japan) Amperex Technology (TDK) matter said. Win old days, like nothing had happened.” ative news fl ow has (Hong Kong) CAMERA DESIGN $ Semiconductors, Moves toward “de-Americanization” inevitably cast a (Germany) Leica iFixit 105 WIRELESS CHARGING billion a contract manu- Huawei’s annual OPTICAL COMPONENTS revenue, on par with facturer of power Luxshare-ICT (China) Google parent Alphabet FOR 3D SENSING amplifi ers, op- We see a clear trend of Chinese (U.S.) Also makes Apple’s cables and AirPods Source: Company filings Lumentum tical parts and Halted shipments to Huawei; Huawei Shenzhen Sunway Communication (China) companies decoupling from U.S. unclear if resumed radio frequency Another Apple supplier components, has suppliers. … There is no turning back received increased orders from Scott Lin NAND FLASH COMMUNICATION AND

Senior vice president of WPG Holdings, the world’s biggestbiggest semiconductorsemiconductor distributordistributor Illustration by Eric Chow HiSilicon Technologies, Huawei’s chip MEMORY CHIPS RADIO FREQUENCY CHIPS design arm. MediaTek, the world’s sec- AUDIO Samsung Electronics Huawei’s HiSilicon Technologies

ond-largest mobile chipmaker after CHIPS iFixit (South Korea) radio frequency transceiver (China) Qualcomm, and Japan’s Murata World’s biggest NAND Huawei’s Skyworks Solutions front-end module Ramping up flash memory maker Manufacturing have also gained orders, Key chip manufacturers asked by Huawei to increase production HiSilicon DRAM CHIPS (U.S.) multiple industry sources confi rmed. SK Hynix (South Korea) Technologies With Skyworks and Qorvo temporarily Companies Description Samsung Electronics (South Korea) FIH Mobile -- a subsidiary of Hon Hai (Japan) (China) halting supply, Japan’s Murata China Semiconductor Gained orders for Huawei-designed mid- to low-end chips SK Hynix (South Korea) Precision Industry, commonly referred to Manufacturing No. 2 NAND maker Manufacturing gained orders; Micron (U.S.) newcomers like RichWave (Taiwan) as Foxconn -- and BYD, a Chinese man- International Co. Micron (U.S.) (potential replacements) quickly gained supply certification ufacturer, have won new contracts to as- Jiangsu Changjiang China’s biggest chip packaging and testing house Halted shipments to Electronics Technology Huawei following U.S. ban; Changxin Memory Technologies (China) (U.S.) semble Huawei smartphones. Huawei’s Qorvo front-end module Taiwan Taiwan Semiconductor Huawei has stepped up orders as it puts more self-designed, has partly resumed China doesn’t yet produce high-end mobile previous major manufacturer, U.S.-based Manufacturing Co. customized chips into production following U.S. ban (potential replacement) DRAM; is keen to develop its own OTHER CHIPS Win Semiconductors Gained orders for Huawei-designed radio frequency chips; a Flex, suspended some shipments after the Tsinghua Unigroup’s Tsinghua Unigroup (China) (U.S.) contract manufacturer for Skyworks Solutions and Qorvo Qualcomm American ban came into effect. Yangtze Memory Major mobile chip manufacturer has MOBILE PROCESSORS (beneath DRAM chip) ASE Technology World’s biggest chip packaging, assembly and testing service Technologies (China) Some suppliers confi rmed that Huawei Holding provider halted shipments to Huawei since May; Yet to mass-produce, but (China) has also been secretly preparing its own Huawei’s HiSilicon Technologies (design) unclear if resumed Siliconware Precision Acquired by ASE Yangtze is China’s hope Chip architecture based on tech from SoftBank-controlled Arm Industries (Taiwan) technologies for years, but has not put to take on Samsung and Holdings (U.K.), which reportedly stopped working with Huawei MediaTek Powertech Technology Qualcomm rival; has gained share them into large-scale use. The company World’s biggest memory chip packaging and testing service provider Micron in the global in May; manufactured by Taiwan’s TSMC, sole manufacturer of has been trialing its own radio frequency King Yuan Electronics Major chip testing service provider NAND market Huawei high-end processors (as well as iPhone core processors) components for a decade, one tech exec- Source: Industry sources, Nikkei Asian Review analysis Source: iFixit (www.ifixit.com), Bernstein Research, Goldman Sachs, Nikkei Asian Review analysis

12 Nikkei Asian Review Sept. 16-22, 2019 Read more at asia.nikkei.com 13 ON THE COVER

pall over its performance. Ren has said he its new OS, and that it would “only take expects the company’s revenue to fall by one to two days” to migrate Android to $30 billion this year. It has had to retreat Harmony if needed. from the American market almost entirely, Harmony was initially slated to roll out while European market smartphone ship- on smart televisions, watches and speak-

ments fell by 16% in the second quarter, ers, not on handsets -- a fact that market Getty Images according to research company Canalys. watchers said shows that the process of Despite the hits to its overseas sales, replacing Android might not be so simple. Huawei has proved surprisingly resilient, At the recent IFA 2019 electronics expo in Copies of “Dedication: The Huawei Philosophy said Arisa Liu, an analyst at the Taiwan Berlin, though, Huawei’s consumer busi- of Human Resource Management” stand on display at Huawei’s headquarters in Shenzhen. Institute of Economic Research. “But ness head Richard Yu told Chinese media Washington could still come up with that it may introduce the Harmony smart- new ways and tighter controls. If it’s a phone version with the fl agship P40, due cord high of 38% in the quarter ending in prolonged [clampdown], some Huawei to be announced next March. June 2019, according to Canalys. projects will still be delayed and its tech Huawei has acknowledged that it needs Beijing moved a licensing round for development will be slowed. But ... it’s not an ecosystem of services to get Harmony fi fth-generation networks forward to June, dying or crashing.” off the ground, and has said it will invest accelerating the rollout of the technology Perhaps the biggest question hanging $1 billion to support developers to build to give a boost to Huawei, which will pro- over the company apps on its platform. vide much of the infrastructure for the is over the software Privately, some Huawei employees ac- new networks. And the Chinese govern- that it uses on its knowledge how sizable the task is. “We ment is set to unveil its own blacklist, seen phones. Google’s have fully prepared for some tough times as a warning to international companies Android operating if we need to use our own operating sys- not to cut off supplies to Huawei. Huawei share% of China’s38 smartphone system has an 80% tem,” one manager told Nikkei. “An OS American logistics company FedEx is market in the quarter in Beijing’s sights, after being accused of ended June -- share of the global really needs massive [numbers of] users a record high smartphone market, and accumulated time for feedback and sending packages of Huawei equipment Source: Canalys and is used by debugs so that it can run smoothly. We be- to the wrong destinations, and of holding Samsung Electronics, lieve all the Chinese developers will be on onto more than 100 parcels of Huawei- Xiaomi, Oppo and our side, but it will still take some one to related shipments, rather than shipping LG Electronics. That huge user base has two years for the ecosystem to thrive.” them to China. translated into a massive ecosystem of Domestic consumers might be patient, Ren himself has said that he would mobile apps, and the services that Google but losing access to Google’s services rather the government not back down offers alongside it -- Google Play, Gmail, could have a real impact on Huawei’s in- in the trade war, even if Huawei is held YouTube and Google Maps -- are a major ternational smartphone ambitions. “With- hostage. In any case, Beijing is unlikely draw for users. out Android and those popular apps, it’s to see the company as a bargaining chip. Without a permit from the U.S. gov- likely that Huawei would be forced to Market watchers and tech industry execu- ernment, Huawei’s new smartphones become only ‘China’s Huawei’ instead of tives said that Huawei’s success underpins launched after the ban may not have ac- the more powerful ‘global Huawei’ that it China’s ambition to become a technology cess to Google’s mobile services. is currently,” a tech executive told Nikkei. superpower; it is too big to fail. In August, Huawei introduced its own “It’s the most successful Chinese tech “Harmony” operating system. Although NATIONAL PRIDE One undeniable fac- company by revenue, by technology and Huawei said it will prioritize using tor behind Huawei’s resilience is the sup- by execution. It’s the national pride,” said

Illustration by Eric Chow Android on its phones if allowed to do so, port that it has received from Beijing. The Jonah Cheng, chief investment offi cer at it claims it is very sim- company’s name means “China can make J&J Investment, and a former UBS tech ple for it,” and there is a sense that protecting the analyst. “For most Chinese people, hitting developers company from foreign aggression has be- Huawei is an attempt by the U.S. to destroy to build come a national project. the whole of China. ... China is unlikely to apps on In the face of the trade war, Chinese con- give in and allow Huawei to fall.” sumers are buying local. Huawei’s share of the domestic smartphone Nikkei staff writer Yifan Yu in Palo Alto, U.S., market advanced to a re- contributed to this report.

14 Nikkei Asian Review Sept. 16-22, 2019 BUSINESS POLITICS & ECONOMY Pomelo shakes up fast Why Indonesia and India are hungry fashion in Southeast Asia page 16 to host the 2032 Olympics page 32

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Aug. 12-25, 2019

U.S.: US$6 / Japan: ¥600 (including tax) / Euro: EUR6 / U.K.: £4 / Australia: A$8 / Bangladesh: TK480 / Brunei: B$9 / Cambodia: US$6 / Canada: C$9 / China: RMB50 / Hong Kong: HK$50 / India: Rs200 / Indonesia: Rp72000 / Korea: W7500 / Macau: HK$50 / Malaysia: RM20 / Mongolia: US$6 / Myanmar: US$6 / Nepal: NR470 / New Zealand: NZ$9 / Pakistan: Rs600 / Philippines: P280 / Singapore: S$9 / Sri Lanka: Rs800 / Switzerland: CHF10 / Taiwan: NT$200 / Thailand: B210 / Turkey: TL16 / UAE: AED27 / Vietnam: US$6 ISSN: 2188-1413 ON THE COVER Avalon/Jiji

Graduates of Columbia University’s School of International and Public Affairs wave flags YIFAN YU and COCO LIU Nikkei staff writers during the 2018 commencement ceremony.

8 9 ON THE COVER Reuters

PALO ALTO, U.S./HONG KONG Driven one taking summer school [being] required researchers, and urged that academics and by a desire to experience college life in to go through such a process,” she said. “I university administrators receive training America, 19-year-old Vivian recently took was not even applying to study aerospace in how to identify potential threats. The a train for four hours from central China [engineering] in the U.S.; I just wanted to crackdowns are part of a larger pattern to the southern city of Guangzhou, the take a two-month computer course.” of pressure on the exports of U.S. tech- nearest place where she could take a visa It took a month of waiting and a letter nology and intellectual property to China interview at a U.S. consulate. Her plan hit of guarantee from the university that she -- in May 2019, the Trump administration turbulence the moment she arrived. would not be allowed to enter any labora- announced strict new restrictions on soft- “What is your major?” Vivian recalled tories before the consulate fi nally granted U.S.-China rivalry has ware and component sales to Huawei intensified since U.S. President Technologies. the visa offi cer asking her. “The next thing her a visa. She was one of the lucky ones; Donald Trump’s first, and only, was that I would have to go through a one of her schoolmates, who planned to state visit to Beijing in 2017. There are fears within the U.S. educa- background check.” study automation, was turned down. tion industry that China may retaliate by A student at a university in , who More than 360,000 Chinese students en- cutting off the supply of students. Beijing asked to be identifi ed only by rolled at American colleges in Lavender Jiang has done this elsewhere in the past. In May her English name, Vivian had the 2017-18 academic year -- A 20-year-old Chinese student of electrical that millionaires in the country were will- popular destination for Chinese students 2017, the Chinese government reacted to a engineering at Carnegie Mellon University won a place at summer school up from just 100,000 a decade ing to invest up to a quarter of their an- due to the enduring cachet of an American deterioration in relations with Taipei by at the University of California, ago. These students, and the nual spending into their children’s educa- education. halving the number of permits it issues to Berkeley, one of the world’s universities that host them, are not welcomed here,” said Lavender tion. In 2017, more than 600,000 Chinese The U.S. has a product that Chinese stu- mainland students to study in Taiwan. leading engineering schools. now fi nd themselves in the Jiang, a 19-year-old Chinese who studies students left the country for tertiary educa- dents are desperate to buy; China has a China has no control over the number But being a Chinese student crossfi re of the U.S.’s trade electrical engineering at Carnegie Mellon tion, the majority to study business, engi- huge supply of students willing to spend. of student visas issued by the U.S., making majoring in a subject as sensi- war with China. Since last University in Pittsburgh. “It makes me neering, mathematics and science. However, geopolitics is now getting in the it harder to directly restrict the number of tive as aerospace engineering year, Washington has tight- feel bad, as if someone shut the door in Universities from across the globe have way, as the Trump administration intensi- students heading there to study. However, opened her up to scrutiny. ened visa rules and intensifi ed scrutiny on my face.” rushed to capture a slice of this enormous fi es its restrictions on Chinese businesses Beijing does use propaganda to portray the “Chinese graduate students in my major research collaborations between the two export market, spending big on educational and citizens as part of its broader trade war. U.S. as an unwelcoming hostile state and to are often subjected to additional screen- countries. At the same time, allegations of LUCRATIVE TRADE Chinese parents are expos, marketing campaigns and partner- In 2018, the U.S. shortened the duration diminish the benefi ts of studying abroad. ings, but this is the fi rst time I heard any- spying and intellectual property theft lev- famous for their obsession with educa- ships with their Chinese counterparts. of visas for Chinese graduate students in In May, the Global Times, the Chinese eled by the administration against Chinese tion, but the country’s growing affl uence Undergraduate degrees in the U.S. cost aviation, robotics and advanced manufac- state newspaper owned by the Chinese A graduation ceremony at Fudan students and researchers have contributed over the past two decades has given many on average $37,000 for international stu- turing from fi ve years to one year, citing Communist Party’s mouthpiece the University in Shanghai in 2017: to a hostile environment that threatens to families the means to send their children dents at public colleges in fees alone, ris- the risk of espionage and theft of intellec- People’s Daily, published an op-ed titled The Chinese government has warned prospective students undo years of progress. overseas for further study. A 2015 study by ing to more than $48,000 for private uni- tual property. American intelligence agen- “Studying in the U.S. is a good option but of the trials and disadvantages “The U.S.’s tighter visa controls have Hurun Report, which publishes an annual versities -- among the highest in the world cies have reportedly warned universities is not the only option” which detailed the of studying in the U.S. sent a signal to Chinese students that we rich list of China’s moneyed classes, found -- but the country has remained the most about the risk of spying by students and disadvantages of studying in the U.S. and

Chinese students abroad Fraying academic ties Recent U.S. moves to limit research links to China quadruple in a decade June 2018 May Number of Chinese Return rate U.S. State Department cuts visa length Emory University academics, husband-and- studying abroad (in percent) from five years to one for Chinese wife duo Li Xiaojiang and Li Shihua, fired for (in thousands) students of aviation, robotics and allegedly failing to disclose professional ties advanced manufacturing; media reports to China; follows similar dismissals at MD 600 80 the administration weighed an outright Anderson Cancer Center in April ban on Chinese students 450 60 May April 2019 Institute of Electrical and Electronics Spending bill forbids institutions hosting Engineers bans researchers “interacting 300 40 a Confucius Institute* from also accepting with” Huawei Technologies from its peer Defense Department funding for Chinese review process; reverses decision days later language classes; at least four Confucius 150 20 Institutes at U.S. universities have closed June since, citing the measure U.S. Department of Energy bans its 0 0 *Network of Chinese government-backed language and researchers from China’s “Thousand 2000 ‘03 ‘06 ‘09 ‘12 ‘15 ‘17 culture centers **Recruitment program aiming to draw Talents”** program research talent to China Source: China Statistical Yearbook 2018 Source: National Association of Scholars, official releases, media reports

10 Read more at asia.nikkei.com 11 Reuters ON THE COVER

David Wu, a Ph.D. candidate in called U.S. universities didate specializing in labor economics at UC Berkeley, is worried “too arrogant.” market study, who said that that traveling to communist In June 2019, China’s he has started to factor the countries could “make [him] Ministry of Education U.S. government’s suspi- look suspicious.” issued a warning to stu- cions into his travel plans. dents hoping to study in “I still have some reserva- the U.S. that they may tions when I choose which but there is fear that it may change,” said face diffi culties and de- country to visit when I go David Lewis, an education counsel who lays in obtaining visas, abroad,” he added. “I’m wor- specializes in bringing Chinese students to saying: “The Ministry ried that visiting some com- study computer science and law abroad. of Education reminds munism-linked areas might “That has discouraged people from ap- students and scholars make me look suspicious or plying to the U.S. Instead, they have been to strengthen risk as- [lead me to] become a poten- rethinking their options. ... They want to sessment before going tial spy suspect, which could keep other countries in play.” abroad to study, enhance cause trouble at border con- The U.K. is already picking up some of awareness of prevention and make appro- trol when I reenter the U.S.” Emma Marie Chiang the slack. Lewis said 95% of his students priate preparations.” With both sides in the trade dispute applied for both American and British uni- “This warning is a response to recent apparently willing to use students as versities last year, up from just series of discriminatory measures the U.S. leverage in their negotiations, American ucation sector, which is now the country’s sity due to an unpredictable event, such will be renewing their 30% when he fi rst included ac- took against Chinese students and can also universities are very exposed. fi fth-largest service sector export. Some as a visa crackdown or a pandemic. Two joint policy. cess to the U.K. in his coaching be seen as a response to the U.S.-initiated International students generate $39 universities have become heavily reliant years later, the business school and UIUC’s “We have not yet service in 2016. trade war,” Hu Xijin, the editor of the billion in annual revenues for the U.S. ed- on fee-paying foreign students, and are engineering college co-signed a three-year started renegotiating the Canadian universities are Global Times, wrote on his account. now taking measures to manage the risk. contract with the insurance broker Lloyd’s new rate with the in- also likely to benefi t. America’s The U.S. does not disclose statistics on At the University of Illinois at Urbana- of London. Under the deal, the schools surance company, but it northern neighbor has set out the number of visas applications that it re- Champaign, that meant taking out insur- pay $424,000 for cover worth $60 million, concerns me that with its stall as an open and wel- jects. However, applications are already de- ance. Students from China make up about triggered in the event of a 20% drop in the 2020 election coming coming environment for inter- clining in anticipation of future restrictions. 10% of the university’s students. Since revenue from Chinese students in a single up and the uncertain- national students, with expe- A report from education trade group most pay full tuition, they are a core reve- academic year. ties that come with it, we might not get as dited visa processing for some applicants. NAFSA, released in May, showed that nue stream for the school. “The insurance is not because of Trump, good a deal as [we did] three years ago,” Perhaps more signifi cantly, Canada new international student enrollment in In 2015, Jeffrey Brown, the dean of the but his administration defi nitely makes Brown said. offers three-year post-study work visas, the U.S. is down 6.6% in the current aca- Gies College of Business at UIUC and a having such insurance an even better and has made it easier for international demic year. “These decreases are in part scholar in risk management, came up with idea,” Brown said. RISING COMPETITION With the threat students to immigrate -- in contrast to the due to several troubling federal policy the idea of insuring the college against The insurance has yet to be triggered, of new restrictions looming, some students U.S., where the Trump administration has changes that have altered the perception Lindsey Qian a sudden reduction in the number of and enrollment is actually slightly up for are reconsidering their plans. sought to reduce the number of “H-1B” of the United States as a welcoming desti- A marketer in a gaming company in Beijing Chinese students enrolling at the univer- the coming academic year, but the schools “Nothing has really changed [in policy] work visas by increasing the amount of ev- nation for international students, scholars, idence it requires from applicants in order and researchers,” the report said. to prove their qualifi cations, and by sus- pending a “premium processing” chan- U.S. universities have tried to distance Where the U.S.‘s international Where China‘s international students Why international students are shying away from the U.S. themselves from the administration’s students come from (in percent) come from (in percent) Key reasons institutions cite for declining international enrollment (in percent) nel, which allowed fast-track applications hostility. Some, including the University Top countries of origin for the 2017/18 Top countries of origin in 2018 for a $1,500 fee. That has created a backlog academic year Fall 2016 Fall 2017 Fall 2018 of California, Berkeley, Yale University South Korea in processing H-1B visas that has deterred and New York University, have sent open 34 68 83 Visa application process companies from hiring international 10.3 Thailand (e.g. delays or denials) letters to students offering support and 5.8 students. China Pakistan 15 57 60 assistance. Even so, the atmosphere adds Other U.S. social and political environment Closing off the possibility of working in 33.2 5.7 37.4 a new level of anxiety for students and 4.7 India 19 54 59 Enrolled in an institution in the U.S. after graduation is a major disin- Other researchers. 4.3 a country other than the U.S. centive for Chinese students, reducing the 69.2 U.S. “I don’t feel any less welcome at Berkeley, 12 33 44 Concerns over physical safety potential return on their sizable invest- 17.9 (e.g. gun violence, civil unrest) ment in fees and costs. and I think most American universities Canada 2.4 India 41 44 are quite liberal and need international Saudi Arabia Concerns over securing a job Lindsey Qian is a marketer in a gaming 4.1 South Korea 5.0 0 50 100 collaborations to further their [research],” Hong Kong, Macao and Taiwan not included company in Beijing. In 2018, she applied said David Wu, an economics Ph.D. can- Source: Institute of International Education Source: Chinese Ministry of Education Source: Institute of International Education to half a dozen digital marketing master’s

12 Nikkei Asian Review Aug. 12-25, 2019 Read more at asia.nikkei.com 13 ON THE COVER

programs in the U.S., and received offers in Singapore and Hong Kong cost half sities than in previous years, and other over- from several prominent schools, including as much. seas study consultants also saw the same Columbia University and the University of “Since my career plan is working in trend this year,” said Haichao Wu, founder Maryland, for a place in the fall 2019 class. Asia anyway, why bother traveling all the and CEO of Kaiyin Group, an education Qian declined all the offers and decided to way to the U.S. just to contribute to their consulting company that helps roughly 500 reapply for the 2020 intake to colleges in [gross domestic product] without getting Chinese high school students prepare U.S. Singapore and Hong Kong. any work experience back?” Qian said. college applications every year. “I think “For me, getting a master’s degree in American universities, especially the pub- the U.S. is mostly because I want to use ALL EYES ON 2020 The lic ones, are stocking up for it as a steppingstone in my career,” Qian U.S. government’s threats winter. They are admitting said. “But recent news on the deteriorating to restrict Chinese stu- as many Chinese students China-U.S. relationship and the tightening dents’ access to American as they can this year, because H-1B policy makes me wonder if I can fi nd education have run ahead they might not be able to do a job in the U.S. after I graduate.” of actual changes to poli- so next year if Trump gets A master’s degree in the U.S. would cies. However, if Donald reelected.” have cost more than half a million yuan Trump wins reelection next Even with the election (over $72,000), Qian said, and the leg up year, analysts worry that still more than a year away, it may or may not have given her in the his administration could the result is already the competitive jobs market in China does double down on its anti- subject of intense interest not justify the expense. MBA programs immigration agenda. in China. “Chinese parents “Right now, most of it is are becoming U.S. politics just rhetoric,” said Rachel experts now as they closely Banks, director of pub- watch the 2020 election and lic policy at NAFSA. That try to evaluate how it will alone is damaging, she said, but warned affect their kids,” Wu said. that “rhetoric could become the reality. Yue Gao, a 49-year-old English teacher in [That] depends on which policy direction Shanghai, has a son studying in California the country will take, which is going to be and a daughter at school in China. The decided by the upcoming election.” U.S. presidential election is already a pop- Rachel Banks Director of public policy at NAFSA Anecdotally, universities seem to be ular topic among parents in her daughter’s preparing by enrolling as many students class, who share news and updates on as possible in advance of any new their WeChat group. “I wasn’t interested Cram school: U.S. universities are “stocking up for winter” by accepting restrictions. in the news before,” Yue said. “But now large numbers of Chinese students “For fall 2019, I think my students have I tune into [international news channel] this year, says one consultant. received even more offers from U.S. univer- CCTV-4 almost every day.”

U.S. share of international students is falling (in percent) 0 5 10 15 20 25 30 U.S. U.K. China France Australia 2001 Canada 2018 Russia Germany Japan

Spain Top-ranked countries for each year shown

Emma Marie Chiang Source: Institute of International Education

14 Nikkei Asian Review Aug. 12-25, 2019