This is the maiden installation of Asia Times’ “Views from Beijing”, a new regular op-ed column featuring the views and perspectives of China’s leading thinkers at top universities, think tanks and academic institutes on the most pressing issues of the day.
BEIJING – While the Biden administration’s new chip ban will certainly have a serious impact on China’s semiconductor industry, the extent to which it will do so remains to be seen.
Compared to the Wolf Amendment of 2011, which completely blocked US-China aerospace cooperation, the new ban has no supporting legislation to define what sort of exports to China are permitted.
It is an administrative decree under the US president’s emergency powers that tasks the Commerce Department’s Bureau of Industry and Security (BIS) to “restrict the People’s Republic of China’s (PRC’s) ability to both purchase and manufacture certain high-end chips used in military applications,” through yet-to-be-specified approval procedures that limit the free flow of trade and people.
American semiconductor industry experts note that the technical details published by the Commerce Department’s BIS are garbled and, in many cases, incomprehensible, suggesting a document written in extreme haste without consultation with industry experts. The semiconductor industry was reportedly not consulted because the Commerce Department wanted to promulgate the new rules before business had the opportunity to lobby against it.
Approval systems always have loopholes. The US Commerce Department has issued similar restrictions before, but has subsequently approved most export license applications. It remains to be seen whether the same will happen with this new ban, which threatens the health and competitiveness of the US semiconductor industry.
A complex negotiation is underway between the Biden administration and the business community, involving the federal government at the executive level, as well as federal agencies and local interests.
If the US government enforces the new controls without allowing exceptions, the semiconductor industry can be expected to lobby vigorously against it. The global nature of the semiconductor supply and distribution system, moreover, makes leakproof enforcement unworkable. It is impossible to completely cut off the relevant transactions simply through US enforcement.
Finally, it will take time to see the impact of the new ban on Chinese American executives in China’s semiconductor industry. The anti-Chinese atmosphere in the US, as well as the opportunities for development of China’s semiconductor industry and China’s efforts to attract talent, may help China to retain and recruit highly skilled personnel.
For all these reasons, the American blockade will inevitably have wide gaps. But these gaps will not be wide enough to prevent significant hardship for China’s semiconductor industry, which will have to address its fundamental problems.
This is an intensifying battle of envelopment and counter-envelopment. China’s semiconductor industry can only survive through its own development. Given the importance of semiconductors in the US-China technology war and strategic competition, China cannot accept defeat with excuses such as the complexity of the semiconductor supply chain, the challenges of technological development and financial pressure.
In an increasingly difficult environment, China must “look for life in the midst of death.” It has an institutional advantage, namely the capacity to concentrate its efforts for great achievements. It must adapt the requirements of science in a pragmatic fashion and find a way to survive.
It should be assumed that Beijing is well aware that this new ban, if strictly enforced, implies a significant escalation of the US technology war on China. This escalation is not an isolated action. It is logically connected to the US establishment’s initiation of the Russia-Ukraine conflict, the launch of sanctions against Russia and disruption of Russian-European oil and gas pipelines.
These initiatives are all aimed at regaining pricing power over commodities, preventing the free flow of capital and highly skilled labor, and impeding the rational distribution of the means of production in the global marketplace.
This unprecedented and hitherto unimaginable concurrence of events shows that the US establishment and is willing to destroy the basic principles on which the existing globalized economic system and capitalism is based in order to maintain its leading status.
In the US establishment’s view, since the US cannot achieve its goals in the existing system, they can only destroy it and make uncompromising efforts to subordinate the rest of the international community and opposing domestic political forces and economic interests to their will, thus creating a new order that best serves their own interests.
Specifically, since American firms cannot long stay ahead of Chinese companies through their own development in semiconductor industry competition, the new ban is an attempt to disrupt the semiconductor supply chain to block and stymie China’s companies.
As noted, the new ban will inflict significant damage on the US semiconductor industry, and the Biden administration does not seem to care. In the short term, US semiconductor interests will apparently not be able to reverse the direction of US policymaking.
The core of the issue is not narrow American economic interest but rather the preservation of America’s unipolar global power status.
America will attempt to extend its efforts to suppress China to other countries or entities around the world in the future. The US curbs on the semiconductor supply chain today will no doubt be extended to other industries.
The ultimate goal of the US is to ensure that it remains at the top of the global order while keeping other countries beneath it. It remains to be seen whether US allies like Japan, South Korea and Germany, whose industry is highly integrated with China, will buckle to American pressure.
Once the near-total semiconductor ban takes effect, the US can be expected to expand the scope of the crackdown to new forms of energy, biotechnology and other high-tech fields.
If the US nonetheless fails to win the competition against China, it will probably take additional measures to prevent companies in the US and allied countries from investing in Chinese technology.
One possible American course of action would be to replicate the Ukraine model in the Taiwan Strait, that is, drawing China into a military confrontation in order to force American allies to join in sanctions against China.