Computer chip ban signals new era as Biden and Xi meet

WASHINGTON (AP) — The Biden administration’s decision to block exports of advanced computer chips to China signals a new phase in relations between the world’s two largest economies — one in which trade matters less than competition. increasingly determined to be the world leader in technology and military power.

The aggressive move, announced last month, will help set the tone for President Joe Biden. upcoming meeting with the Chinese President Xi Jinping Monday on the sidelines of the G20 summit in Asia. This is proof of Biden’s determination to “manage” US competition with China, whose officials were quick to condemn export ban.

After more than two decades in which the focus has been on expanding trade and global growth, both countries are openly putting their national interests first as the global economy grapples with high inflation and the risk of recessions. The United States and China have each identified the development and production of computer chips as vital to economic growth and their own security interests.

“We will do whatever it takes to protect Americans from the threat from China,” the Commerce Secretary said. Gina Raimondo said in an interview. “China is crystal clear. They will use this technology for surveillance. They will use this technology for cyberattacks. They will use this technology to, in various ways, harm us and our allies, or our ability to protect ourselves.

Xi responded to the export ban in his statement to Congress last month The Chinese Communist Party, where he obtained a third mandate at the head of the country. He promised that China would act more aggressively to become self-sufficient in the production of semiconductors and other technologies.

“To improve China’s innovation capability, we will accelerate the launch of a number of major national projects that are of strategic, comprehensive and long-term significance,” Xi said.

The Chinese government has named the development of advanced computer chips capable of handling everything from artificial intelligence to hypersonic missiles as one of its top priorities. To bridge the gap until it can get there, China has relied on imports of advanced chips and manufacturing equipment from the United States, which has imposed a series of controls on the export last month that block the shipment to China of the world’s most advanced chips, factory and industry equipment. America-related experts.

The United States and its allies famously deployed export controls against Russia after the invasion of Ukraine in February, making it more difficult to resupply Russian forces with weapons, ammunition, tanks and aircraft. Because of these constraints, Russia has relied on drones from Iran and the United States accused North Korea to supply them with artillery.

Until recently, the United States assumed that strong trade relations would bring countries together in a way that would make the world safer and wealthier, a post-Cold War order. Global supply chains were supposed to reduce costs, increase profits and allow democratic values ​​to seep into the terrain of oligarchies, dictatorships and autocracies.

But after a global pandemic, the war in Ukraine and China’s own ambitions, the Biden administration and many European and Asian allies have chosen to prioritize national security and industrial strategies. The United States and the European Union have provided tens of billions of dollars in incentives to further stimulate domestic production of computer chips.

In a speech last month at IBMBiden said China specifically lobbied against a law providing $52 billion to produce and develop advanced semiconductors in the United States, a package of incentives that was followed by a series of government announcements. Intel, Micron, Wolfspeed and others regarding the construction of computer chip factories. in the USA.

He said some of the GOP lawmakers who opposed the measure agreed with the arguments made by China.

“The Chinese Communist Party was lobbying the United States Congress against passing this legislation,” Biden said. “And unfortunately some of our friends from the other team bought it.”

Donald Trump had fiery rhetoric about China during his presidency, impose tariffs that the Biden administration has yet to lift. But by any qualitative measure, the computer chip export bans are much tougher than anything imposed by Trump, said Gregory AllenPrincipal Investigator of the Strategic Technologies Program at the Center for Strategic and International Studies.

Allen said the Trump-era tariffs were significant in dollar terms, but had almost no effect on the trade balance. Import taxes were also not strategic. Export controls imposed by the Biden administration would be a setback for Chinese technology that is already decades behind the United States

“We basically pledged to say, China, you’re not going to achieve your number one goal,” Allen said.

The era of China, Russia and other competitors having relatively free access to U.S. and European markets appears to be coming to an end, said Christopher Miller, a Tufts University professor and author of the book “Chip Wars.” .

“The risks posed by these countries have increased, so Western leaders have reconsidered the wisdom of giving adversaries open access to their markets,” Miller said.

Instead of trying to work together as a single global economy, new alliances are formed such as the Quad (Australia, India, Japan and the United States) and existing partnerships such as NATO are expanded. Economic integration between these partners has become essential, as US controls on advanced chip exports need support from other producers in Japan and the Netherlands.

“All major powers are restructuring international economic relations in ways they hope will improve their geopolitical position,” Miller said. “Semiconductors are just one of many areas where trade, technology and capital flows are being re-politicized due to great power rivalry.”

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