Huawei reportedly plans to build a manufacturing plant in Shanghai

nanoguy

Posts: 610   +8
Staff member
Why it matters: The US sanctions imposed on Huawei could turn out to be less effective than previously thought, as the Chinese company is scrambling to build its own chip manufacturing arm. The project could provide a stop gap solution for some of its current supply issues, but analysts are skeptical about its potential in solving the problem of high-end chip manufacturing for Huawei's premium smartphones.

Back in September, Huawei chairman Guo Ping told employees the company had a plan to free the world from the tight grip Google has on the Android operating system. He also lamented the consequences of the Trump administration's growing set of restrictions that have left Huawei without access to several key suppliers of hardware and software components needed for its products.

Guo reassured employees the company would soon be able to cater to the 600 million users that bought into its ecosystem without need to purchase or license American-made technology. The first step was the introduction of Huawei Mobile Services as a replacement for Google Mobile Services on new devices. HarmonyOS could be the second step, but it's not even close to being a worthy replacement for Android on mobile devices.

At the time, he also promised that Huawei would invest heavily into its HiSilicon subsidiary and forge stronger partnerships with chip makers in China as a countermeasure to the US restrictions. The way Guo sees it, the US is intent on sabotaging China's position at the forefront of the 5G race, so he encourages Huawei employees to do their part in China's plan for technological self-sufficiency.

According to a Financial Times report, Huawei is exploring ways to quickly build a chip manufacturing plant in Shanghai to replace the need for external suppliers. Previously, the company sought to tap SMIC, a Shanghai-based foundry that seemed like a good partner until it was revealed that it was using American-made technology.

Under the new plan, Huawei would build the manufacturing plant and have it run by one of its partners, Shanghai IC R&D Center, which has strong government backing. In the first phase, the factory would experiment with 45nm chips. By the end of 2021, Huawei would start making 28nm chips for use in IoT devices and smart TVs. And by 2022, it could even make chips for 5G modems and base stations based on a 20 nm process.

Notably absent from the plan are smartphone chips, which require the latest 7nm and 5nm process nodes if Huawei intends to remain competitive with its rivals. However, the company does have a large home market that will be easier to serve, and could theoretically stretch its current stockpile of high-end mobile chips into 2022, provided it streamlined its portfolio of mobile handsets.

Last month, reports surfaced online that Huawei may be looking to sell its Honor smartphone unit to another Chinese company. That would solve some of the supply issues and allow Huawei ample time to develop its manufacturing arm, but it doesn't change the fact that it's losing market share in Europe and Asia. Perhaps ironically, it is other Chinese brands such as Oppo, OnePlus, Vivo, and Realme who are eroding Huawei's bottom line, and the clock is now ticking for Huawei to find a way to ensure its long-term survival.

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Uncle Al

Posts: 7,581   +6,089
With Huawei now barred from the latest chip technology, and an increasing number of nations banning their products, that seems increasingly unlikely.
And let's not forget that our own sources will follow this change and adjust our own rules to include the new distribution. Due to their size I doubt they ever find a way to remove Hauwei from this ban unless there is a MAJOR shake up of the Chinese political system, which is highly unlikely in our lifetime .....
 
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orbital

Posts: 12   +8
Call it Huawei or not (name doesn't matter) is a China-subsidised and backed company that is not different to Boeing, Lockheed Martin or any of the German, French, UK or any other government-backed companies worldwide. No matter if you call them private or not. They are part of the economy, form significant portion of the GDP, give work to hundreds of thousands and have been/will be protected by all means by the respective countries. China is not different to anyone else here.

If you told me years ago that so called "communism" existed only in China/Russia, I would have easily agreed, however seeing what happened before and after 2009 "in the free world" I am no longer convinced. Governments saving private banks, rating agencies, governors and top level executives that had to rot in jail for intended and long-term manipulations both at large-scale top and individual levels - the poor (masses) paying all bills deliberately set up and twisted by the 0.1% rich... How is China different to the US and French or German government saving its own automobile industry (by all means)? Protections, duty, fees, artificial walls - all non-market ones - in the west in relation to import, currency stability and key sectors are times higher than these of China. "State communism" and centralism/one-point management in the US is levels above China. Not to mention sanctions where nothing else works.

Huawei is losing market share and will eventually lose it all. At the same time Xiaomi, Oppo & Vivo combined have more market share than Samsung and Huawei individually. Apple is fading behind and this won't change as time goes. China is 1.3 billion. India via one border is almost the same. Indonesia, Vietnam, the Philippines all around with some other 500 million citizens. Yes, they are still interested and can predominantly afford budget devices but their equivalent of middle class (and above) is growing at crazy rates and Huawei-like clones, irrespective to the name, are satisfying their needs, from inside. They don't need export as they import and consume right away what they manufacture. They need it within.

China doesn't need the West anymore. Unfortunately. They live in their own matrix and this matrix is taking everything else over in the very same way as the US before. Their tech is not there yet but it is only a matter of time. "Sanctions" and non-market-influence methods would have been effective 20-30 years ago before the US C-level greed exported all there is (including R&D) to Asia. It's too late now.
 
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mbrowne5061

Posts: 1,684   +958
Call it Huawei or not (name doesn't matter) is a China-subsidised and backed company that is not different to Boeing, Lockheed Martin or any of the German, French, UK or any other government-backed companies worldwide. No matter if you call them private or not. They are part of the economy, form significant portion of the GDP, give work to hundreds of thousands and have been/will be protected by all means by the respective countries. China is not different to anyone else here.

If you told me years ago that so called "communism" existed only in China/Russia, I would have easily agreed, however seeing what happened before and after 2009 "in the free world" I am no longer convinced. Governments saving private banks, rating agencies, governors and top level executives that had to rot in jail for intended and long-term manipulations both at large-scale top and individual levels - the poor (masses) paying all bills deliberately set up and twisted by the 0.1% rich... How is China different to the US and French or German government saving its own automobile industry (by all means)? Protections, duty, fees, artificial walls - all non-market ones - in the west in relation to import, currency stability and key sectors are times higher than these of China. "State communism" and centralism/one-point management in the US is levels above China. Not to mention sanctions where nothing else works.

Huawei is losing market share and will eventually lose it all. At the same time Xiaomi, Oppo & Vivo combined have more market share than Samsung and Huawei individually. Apple is fading behind and this won't change as time goes. China is 1.3 billion. India via one border is almost the same. Indonesia, Vietnam, the Philippines all around with some other 500 million citizens. Yes, they are still interested and can predominantly afford budget devices but their equivalent of middle class (and above) is growing at crazy rates and Huawei-like clones, irrespective to the name, are satisfying their needs, from inside. They don't need export as they import and consume right away what they manufacture. They need it within.

China doesn't need the West anymore. Unfortunately. They live in their own matrix and this matrix is taking everything else over in the very same way as the US before. Their tech is not there yet but it is only a matter of time. "Sanctions" and non-market-influence methods would have been effective 20-30 years ago before the US C-level greed exported all there is (including R&D) to Asia. It's too late now.
I'll have whatever he is smoking.
 

kiwigraeme

Posts: 155   +115
China & Russia are not communist -never had been - I heard a theory it only works up to about 150 people. Been kind of interested how 60s hippy communes have evolve to now - It only took 1 bad apple to steal the communal bank account and insist on free love from all .
When I've seen unbridled capitalism in my travels - it's quite sad - at the moment our representative democracy and regulated capitalism , with State ownership of important resources, infrastructure etc and social nets to help is the best we got so far.
 

Endymio

Posts: 989   +831
Call it Huawei or not (name doesn't matter) is a China-subsidised and backed company that is not different to Boeing, Lockheed Martin or any of the German, French, UK or any other government-backed companies worldwide.
There are no US or European corporations backed to the extent Huawei is by the PRC. Airbus was for a period receiving a certain amount of subsidies; however that ended with a WTO ruling against them, and even at its height, the amount of assistance given was a tiny fraction of what Huawei receives.

In any case, the primary gravamen against Huawei isn't the subsidies in any case, but the fact that installing Huawei gear into a country's communication infrastructure is essentially giving the PRC a backdoor into the system, through which they can potentially eavesdrop or even shut it down at will.

China doesn't need the West anymore. Unfortunately. They live in their own matrix
China has one of the most heavily dependent economies on foreign trade in the entire world. Without trade with the US, Japan, and Australia alone, their economy would collapse overnight.
 

Reehahs

Posts: 1,007   +621
There are no US or European corporations backed to the extent Huawei is by the PRC. Airbus was for a period receiving a certain amount of subsidies; however that ended with a WTO ruling against them, and even at its height, the amount of assistance given was a tiny fraction of what Huawei receives.

In any case, the primary gravamen against Huawei isn't the subsidies in any case, but the fact that installing Huawei gear into a country's communication infrastructure is essentially giving the PRC a backdoor into the system, through which they can potentially eavesdrop or even shut it down at will.

China has one of the most heavily dependent economies on foreign trade in the entire world. Without trade with the US, Japan, and Australia alone, their economy would collapse overnight.
Apparently the banking system was too big to fail doesn't count either.

Huawei and apparent PRC backdoors got nothing like what the known 3-letter agencies have on an average person.
 

Endymio

Posts: 989   +831
Huawei and apparent PRC backdoors got nothing like what the known 3-letter agencies have on an average person.
It's a fair point. However, the PRC is certainly more interested in intercepting military and industrial secrets than they are in the "average person". Also, in case of a dispute with China, the CIA is considerably less likely than the PRC to shut down the entire network without warning.
 
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Reehahs

Posts: 1,007   +621
It's a fair point. However, the PRC is certainly more interested in intercepting military and industrial secrets than they are in the "average person". Also, in case of a dispute with China, the CIA is considerably less likely than the PRC to shut down the entire network without warning.
Hunt for industrial/military secrets goes both ways. Unlike PRC, you are more likely to be bombed (Iran's nuclear power station), invaded (Iraq +), sabotaged (Mossad's epic missions), and kidnapped (Black sites) by the 'good guys'.

The issue here is restriction to consumer choice. Huawei 5G tech is superior to any competitor offerings. Why do I want to pay more for lower quality of service and poorer coverage 4G/3G?

No idea what network shutdown are you referring to here. No network shut down is as damaging as sanctions being imposed on a country. These sanctions hardly ever work on changing the regime, instead punish the citizens who already powerless against their rulers.

Coming back to my comment about the banks, why was our tax money used to bail them out when we won't see the benefit of it back.

What-about-ism.
Is it really though?
 

Endymio

Posts: 989   +831
Huawei 5G tech is superior to any competitor offerings.
It's cheaper, certainly -- and for good reason. The Chinese government is pumping tens of billions of dollars into the firm to allow them to undercut competitors worldwide. Ask yourself what the PRC expects in return for that unprecedented investment. Even ignoring the national security considerations, China's theft of industrial IP alone has already cost every man, woman, and child in the US several thousand dollars each. Allowing the PRC a backdoor into every cell phone in the country will only exacerbate that. Are you factoring that cost into your calculations?

Coming back to my comment about the banks, why was our tax money used to bail them out when we won't see the benefit of it back.
You're preaching to the choir on that one, but it's a side issue to Huawei.
 
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Reehahs

Posts: 1,007   +621
It's cheaper, certainly -- and for good reason. The Chinese government is pumping tens of billions of dollars into the firm to allow them to undercut competitors worldwide. Ask yourself what the PRC expects in return for that unprecedented investment. Even ignoring the national security considerations, China's theft of industrial IP alone has already cost every man, woman, and child in the US several thousand dollars each. Allowing the PRC a backdoor into every cell phone in the country will only exacerbate that. Are you factoring that cost into your calculations?

You're preaching to the choir on that one, but it's a side issue to Huawei.
First of all, Chinese government has little incentive to pump money into Huawei as it is already well established. Chinese market and competition within is cut-throat enough to weed out unsuccessful from reaching proper growth.

Second, are you counting tax cuts as subsidies as well? Tax cuts and preferential treatment is another way of pumping billions into a company. Amazon pays less tax than an average US citizen.

Third, outsourcing manufacturing for cheap labour is the main contributor to IP theft. If you teach someone how to make something, give them the blueprints, the tools, and knowhow, why are you surprised when they undercut you?

The lack of competition in certain markets (I.e. internet) is the biggest contributor to the cost of services paid by US citizens.
 

Endymio

Posts: 989   +831
First of all, Chinese government has little incentive to pump money into Huawei as it is already well established.
If all the PRC wanted to do was "establish" Huawei, yes. But they want Huawei gear in the backbones of all national networks, and the only way to ensure that is to continue funding Huawei at levels that allow it to price their products artificially low:

"In an article in December, the Wall Street Journal detailed how Huawei has received around $75 billion [from the PRC]...."

Or:

"A new report from U.K. lawmakers states, "there is “clear evidence of collusion” between Huawei and the Chinese Communist Party apparatus” ..."

Outsourcing manufacturing for cheap labour is the main contributor to IP theft. If you teach someone how to make something, give them the blueprints, the tools, and knowhow, why are you surprised when they undercut you?
You really should read some of the literally thousands of accounts of companies which have been victimized by China's IP theft. There is outright espionage against firms without operations in China, but for those that try to operate there, the modus operandi is different. China requires the foreign firm to form a joint venture with a local partner. The local partner learns all the trade secrets and operating techniques, then severs the business relationship and sets up as a competitor. Suits for contractual damages are ignored or retaliated against by Chinese authorities, and often in the ultimate insult, the local partner sues their foreign counterpart for "infringement" on their own patents, and a rigged court system finds in favor of the Chinese firm.
 
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Reehahs

Posts: 1,007   +621
If all the PRC wanted to do was "establish" Huawei, yes. But they want Huawei gear in the backbones of all national networks, and the only way to ensure that is to continue funding Huawei at levels that allow it to price their products artificially low:

"In an article in December, the Wall Street Journal detailed how Huawei has received around $75 billion [from the PRC]...."
So what? WSG itself states that the amount was in form of tax breaks and financing over 30 years. Huawei reported $123 billion for 2019.

Have you seen the size of the tax breaks, cheap credit, and incentives being offered to US companies?

The prices will only seem artificially low when their is collusion between large players or a monopoly, keeping the prices way above market value.

"A new report from U.K. lawmakers states, "there is “clear evidence of collusion” between Huawei and the Chinese Communist Party apparatus” ..."
Right, there is no collusion in US tech companies and NSA? Any country's company that has world leading technology / market sector / significant GDP contribution, will have the said country's involvement in it.

You are referring to the same law-makers that lied to their Queen, their public, and dragged the country in illegal wars. Yeah, real trustworthy them lot. They are now doing a bang-up job of Covid response that it is now being publicly referred to as Crony-virus.

You really should read some of the literally thousands of accounts of companies which have been victimized by China's IP theft. There is outright espionage against firms without operations in China, but for those that try to operate there, the modus operandi is different. China requires the foreign firm to form a joint venture with a local partner. The local partner learns all the trade secrets and operating techniques, then severs the business relationship and sets up as a competitor. Suits for contractual damages are ignored or retaliated against by Chinese authorities, and often in the ultimate insult, the local partner sues their foreign counterpart for "infringement" on their own patents, and a rigged court system finds in favor of the Chinese firm.
Honestly, more countries should follow suit of China in forcing foreign companies to form joint ventures with local companies. This will prevent exploitation of the local workforce and resources while upskilling capability.

Why are so many resource rich African/Asian countries so poor? It is no secret that by allowing foreign countries to operate willy-nilly and bribing the local officials, they have deprived the potential development of their nation.

There is a clear bias for a country to support their own companies against foreign aggressors. If this was fair you would seen Samsung winning against Apple in many of the US based lawsuits on dubious patents like 'slide to unlock'.

IP theft, reverse engineering, and trade secret stealing are some of the go to techniques of unethical companies. You see plenty of those everywhere such as Intel versus AMD.
 

Endymio

Posts: 989   +831
So what? WSG itself states that the amount was in form of tax breaks and financing...
Tax breaks, financing, and cheaper rates for resources. In other words, essentially 100% of Huawei's expenses. And that $75B is only what Huawei reports publicly: the tip of the proverbial iceberg.

Have you seen the size of the tax breaks, cheap credit, and incentives being offered to US companies?
I have. None compare remotely to the degree of support given to Huawei.

Right, there is no collusion in US tech companies and NSA?
Collusion allowing these firms to steal the IP and undercut the pricing levels of their foreign competitors? You're right, there is none such.

You are referring to the same law-makers that lied to their Quee, their public, and dragged the country in illegal wars....They are now doing a bang-up job of Covid response
A nice diversion attempt, and if it were just the U.K. government making these claims, you might have a point, but when the list also includes the US, Australia, Japan, India, Sweden, and several other nations, the argument falls apart.

Honestly, more countries should follow suit of China in forcing foreign companies to form joint ventures with local companies. This will prevent exploitation of the local workforce
I got a nice chuckle out of this. I doubt even you believe that the PRC's motivation in all this is to "prevent exploitation" of local workers.
 
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Reehahs

Posts: 1,007   +621
Tax breaks, financing, and cheaper rates for resources. In other words, essentially 100% of Huawei's expenses. And that $75B is only what Huawei reports publicly: the tip of the proverbial iceberg.
An imaginary ice-berg. The apparent support Huawei got in total over 30 years is less than 10% of the 2019 revenue. It is not like Huawei is the only company China has that has made it big internationally.

I have. None compare remotely to the degree of support given to Huawei.
Right, have a look at how Western energy companies have benefitted from Iraq's stolen hydrocarbon resources. US will support it's companies and interests with fire and brimstone, sufficient to shove the uppity country back to stone-age.

Collusion allowing these firms to steal the IP and undercut the pricing levels of their foreign competitors? You're right, there is none such.
As a company if you are big enough in your niche or what you do can have dual-use, you will be working with your government and it is not your choice. IP and other things will go right out of the window.

A nice diversion attempt, and if it were just the U.K. government making these claims, you might have a point, but when the list also includes the US, Australia, Japan, India, Sweden, and several other nations, the argument falls apart.
These nations are hardly independent of each other and most of vested interests that will benefit.

US is the main one leading the charge because its bloatware ridden companies like Cisco would like to see competition removed and these company lobby for it in secret courts against the determent of the US citizens.

Australia and New Zealand plus Canada are part of the five eyes with US and UK, being in the Anglo-sphere and all. If Australia was serious against China then it would stop sell mined goods to it.

Japan is experiencing many of it's mid-tech level industries shrinking as China's workforce advances up the tech tree. They are also not on the best terms since Japan still would not issue a proper apology over the horror it committed on China.

India and China have several border disputes and compete in many industries.

Sweden is up there because Ericsson for 5G is becoming irrelevant and uncompetitive.

I got a nice chuckle out of this. I doubt even you believe that the PRC's motivation in all this is to "prevent exploitation" of local workers.
I don't know but uplifting a population of 1.3 billion people from being dirt poor is pretty good doing.
 

Endymio

Posts: 989   +831
The apparent support Huawei got in total over 30 years is less than 10% of the 2019 revenue.
The relevant word is highlit. Only a fraction of the actual support Huawei receives shows up on balance sheets. IP stolen by Chinese military intelligence and given to them -- not reported. Lower prices on raw materials and components -- not reported. Bribes paid to overseas officials in exchange for contracts -- not reported. None of this is hypothetical ... it has been well documented for many years.

It is not like Huawei is the only company China has that has made it big internationally.
Name any other which has also done so, and you find the PRC's hand in it as well.

If Australia was serious against China then it would stop sell mined goods to it.
Australia has banned Huawei 5G technology, along with many other nations in addition to the US.

I don't know but uplifting a population of 1.3 billion people from being dirt poor is pretty good doing.
The PRC kept 1.3 billion people in dirt-poor poverty for nearly a century, meanwhile slaughtering 100 million of them -- more than 6 million alone in the "cultural revolution". Contrast the poverty, repression, and genocide in China from the 1950s to the early 2000s with the freedom and prosperity in Taiwan. That's the difference the PRC made to the Chinese people.
 
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Reehahs

Posts: 1,007   +621
The relevant word is highlit. Only a fraction of the actual support Huawei receives shows up on balance sheets.
Repeating lies or exaggerating the truth repeatedly doesn't make it true or proportionate. Let me try an example here to make it easier:

If Amazon accuses Google or Microsoft, publishes those accusations in Washington Post then it is not a credible sources or a story. Why? Jeff Bozos owns Washington Post, he can publish whatever he fancies.

When you put the sources owned by the same nations as the ones who accuse Huawei with vague national security concerns, it is not really an independent source. Publications would only be credible if they came from a neutral country or UN for that matter.

Why would Chinese military steal for a private enterprise? Militaries have better things to do then work for private companies.

Huawei with other Chinese pay lower prices for raw materials since most of the raw material is mined in the country.

Let's not talk about bribes as that's a deep rabbit hole with everyone, not just China.

Name any other which has also done so, and you find the PRC's hand in it as well.
That's like saying any country's company will find the country's hand in it as well. Kind of obvious isn't it since the company has to abide by law, lobby, bribe, and pay taxes etc.

Australia has banned Huawei 5G technology, along with many other nations in addition to the US.
My point was not about 5G but China being a threat. How do you know that the tourists are not spies in disguise? If Australia was taking China seriously, it would seize trading and stop enabling them by selling it's natural resources.

You know the whole free trade thing? It doesn't work if countries start putting up tariffs and banning foreign products/technologies. The market will have other players fill the gap when players like US withdraw from trade deals and UK tries to break international law (see glorious Brexit progression).

The PRC kept 1.3 billion people in dirt-poor poverty for nearly a century, meanwhile slaughtering 100 million of them -- more than 6 million alone in the "cultural revolution". Contrast the poverty, repression, and genocide in China from the 1950s to the early 2000s with the freedom and prosperity in Taiwan. That's the difference the PRC made to the Chinese people.
I had a good chuckle here. Let's start by correcting that 1.3 number to 1.4 billion (https://en.wikipedia.org/wiki/China).

Do you really think PRC were worse then Western imperialists powers that ruled China before? There is a reason why their rule is called 'Century of Humiliation' by the Chinese (https://en.wikipedia.org/wiki/Century_of_humiliation). You really can't give PRC all the credit for these lives given ROC (Taiwanese government) is equally responsible for the civil wars (https://en.wikipedia.org/wiki/Chinese_Communist_Revolution). The great Chiang Kai-shek bringing more of the same was worse then Mao, which is why Chiang manage to lose with 4.3 million West-backed soldiers versus the 1.3 million Soviet-backed riff-raff under Mao.

GDP per capita is a good measure of progress of an economy. Taiwan went from $154 in 1952 to $25909 to 2019 (https://en.wikipedia.org/wiki/Economy_of_Taiwan). China went from $54 in 1952 to £10726 (https://en.wikipedia.org/wiki/Historical_GDP_of_China). Seems like pretty good progress given it is 24 million versus 1.4 billion people. Another good metric is PPP, which is given as $538 for Taiwan versus $603 for China (https://en.wikipedia.org/wiki/Purchasing_power_parity).

Every country has got plenty of skeletons in their closets. When they start riding the moral high horse and banning things to the detriment of an average consumer, that's when it gets annoying.

Not everyone in Huawei banning countries agree with the 5G ban, here is an interesting regarding the Chief of Ericson in Sweden:
https://www.ft.com/content/d0399dd4-8a65-4102-ba07-cd71a2d0d505

I am done here and will now unfollow the topic.
 

Endymio

Posts: 989   +831
Why would Chinese military steal for a private enterprise? Militaries have better things to do...
You're missing the obvious. By helping Huawei control the communications infrastructure of other nations, the Chinese military is working for itself. Brushing all this off as "baseless accusations" just won't fly. It's not just one nation making these claims, but many. Additionally, there are literally thousands of private firms which have reported industrial espionage and IP theft losses due to China. Are they all lying also?

Let's start by correcting that 1.3 number to 1.4 billion
You forgot we were referring to past events. At least 100 million of their present population was born after that "poverty uplift" occurred.

Do you really think PRC were worse then Western imperialists powers that ruled China before?
Yes, the PRC was indeed much worse. I'm not counting the lives lost in their civil war, but the mass killings in which the PRC has engaged. There are many, from the "Cultural Revolution", to the Land Reform campaigns, to the "Great Leap Forward" to the crackdown following Tiananmen square to the death squads in Tibet. And this doesn't even count those killed in prison for organ harvesting, nor the millions of women subjected to forced abortions, nor the million-plus Uighurs confined to concentration camps today.