Opinion | To achieve chip supremacy, U.S. is determined – to disrupt the world's biggest tech market for everyone else
By Augustus K. Yeung
In recent years, U.S.-China relations have been following the path of a roller-coaster – going through ups and downs, a stark contrast to the romantic time when the insightful Nixon administration's outreach strategy that sent Dr. Henry Kissinger to Beijing, joining hands, and encountering the Soviet Union.
The Carter administration had also contributed much to the bilateral relations, bringing Deng Xiao-ping to the U.S. Deng's personal charm and celebrated journey to the West had done China and the Western world a remarkable favor. And socialist China has since taken the capitalist road, joining the ranks of the U.S. and its allies on its way to meteoric economic development and miraculous poverty alleviation.
Alas! Then came Trump's stormy trade war that now spirals to Biden's fathomless "chip war", though not quite as destructive as the nuke war that is lurking, looming in Russia's war in Ukraine. It's bad for bilateral relations and undermines mutual trust.
This current war ( be it trade war, war of words, or chip war) sets a downward trend that may spiral out of control – threatening to turn the two friends into foes in its rivalry.
Consider the threats of chip war to China and the world.
"US chip war not only restricts access to most advanced semiconductors – but also aims to undermine China's approach to hi-tech development," said Alex Lo, a fair-minded journalist educated in Canada.
The tech war has just escalated: It was announced at the annual legislative "Two Sessions" in Beijing that investment in science and technology would jump by 10 percent this year, the largest increase in any area of government spending including healthcare, public security, and defense.
China aims to transform the economy and, at the same time, counter an increasingly hostile U. S. and its allies, in both hi-tech and defense.
The move came after Secretary of Commerce Gina Raimondo said the U.S. would have to double down on the chip war, because the current round is proving inadequate. "I suspect there'll have to be – whether you call it Chips Two or something else – continued investment if we want to lead the world," she said.
Raimondo was referring to the U.S. Chips and Science Act, which under President Joe Biden has forced allies to develop domestic semiconductor initiatives – with restrictions on who they do business with, and who they sell products to.
China is the obvious target. Advanced Semiconductor Materials Lithography (ASML) in the Netherlands, for example, is forbidden to sell its most advanced chip-making machines to China, and Taiwan Semiconductor Manufacturing Company (TSMC) has effectively been told to divest from mainland China – and reinvest in facilities in Japan and the U.S.
Isn't this an unmistakable example of hegemony and unreasonable bullying?
Such "chip sanctions" may slow China's overall technological development in the short term. But both U.S. companies and those from allied countries have also complained about the negative impact – on the whole global industry.
They have warned that "chip sanctions" are forcing China to achieve tech self-sufficiency – while the Chips Act denies them access to the most lucrative segments of the Chinese high-tech market.
Strategically, therefore, science and technology are an unprecedented priority. China's total spending on research and development – by the government and private sector – surpassed 3.3 trillion yuan last year, making it the world's second-biggest R&D spender after the U.S.
The ministry has made clear other areas may face budget limits, but not those tech fields deemed crucial to the country. It's clear by now – that the nation is ready to recreate the entire semiconductors ecosystem domestically – as a matter of national security and survival.
"Washington has been willing to disrupt global supply chains, de-globalize international trade, and weaponize the dollar-based international financial system against China. The most obvious and important battleground has been advanced semiconductors," lamented Alex Lo.
China's tech development in virtually all the most important fields – depends on advanced chips. So, restricting its access to them can be "a force multiplier" with destructive impact undermining the country's overall tech and science progress. This will have enormous repercussions on everyone, not just China. Collateral damage may ricochet back to hit Western tech firms.
Interestingly, in a statement published by the Atlantic Council last month, Daleep Singh, who has been reappointed – deputy national security adviser for international economics – argues for more fine-tuned sanctions (to avoid causing unintended damage). "We will see how that works out as being a Democrat, he could be out of a job soon – if Donald Trump returns to the White House. Trump showed he loved sanctions but cared much less about collateral damage," noted Alex Lo.
To achieve chip supremacy, the U.S. is ready – to disrupt the world's biggest tech market in China for everyone else.
China's tech drive may succeed or fail, but the West risks losing its biggest customer. That seems ironic, considering the modern history of the West and China, dating back to before the Opium War, has been to open China, the big country for its almost unlimited market. Now, the U.S. wants to downsize it. (Source: SCMP)
Has the U.S. gone too far in waging the latest tech war?
Wang Yi hit out at what he called efforts by Washington "to suppress China," adding that "the desire to heap blame under any pretext has reached an unbelievable level."
"The methods used to suppress China are constantly being renewed, and the list of unilateral sanctions is constantly being extended," he said, referring to U.S. actions.
Wang spoke on the sidelines of the "Two Sessions" political gathering that offers a rare glimpse into the strategy of Xi Jinping's government for the year ahead.
Rivalry or race, there's this valuable friendship ties struck between Xi Jinping (who is for partnership) and Joe Biden (who is rational) – which can serve as the ultimate link that guarantees peace between the two greatest powers in the global village.
The views do not necessarily reflect those of DotDotNews.
To contact the writer, please direct email: AugustusKYeung@ymail.com
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