The aggressive move, announced last month, will help set the tone for President Joe Biden’s upcoming meeting with Chinese President Xi Jinping on Monday on the sidelines of the Group of 20 summit in Asia. It is evidence of Biden’s determination to “manage” the US’s competition with China, whose officials have been quick to condemn the export ban. After more than two decades in which the focus has been on expanding trade and global growth, both countries are openly prioritizing their national interests as the global economy struggles with high inflation and the risk of recession. The US and China have each recognized the development and production of computer chips as vital to their own economic growth and security interests. “We will do whatever it takes to protect Americans from the threat of China,” Commerce Secretary Gina Raimondo said in an interview. “China is spotless. They will use this technology for surveillance. They will use this technology for cyber attacks. They will use this technology to harm us and our allies or our ability to protect ourselves in any way.” Xi responded to the export ban in his remarks at the Chinese Communist Party congress last month, where he secured a third term as the country’s leader. He pledged that China would move more aggressively to become self-reliant in the production of semiconductors and other technologies. “In order to strengthen China’s innovation capacity, we will move faster to launch a series of major national projects that are strategic, big-picture and long-term,” Xi said. The Chinese government has named the development of advanced computer chips that can handle everything from artificial intelligence to hypersonic missiles as one of its top priorities. To bridge the gap until it gets there, China relies on imports of advanced chips and manufacturing equipment from the U.S., which imposed a series of export controls last month that block shipments to China of its most advanced chips, manufacturing equipment and industry in the world experts connected with America. The US and its allies famously rolled out export controls against Russia after February’s invasion of Ukraine, making it harder to supply Russian forces with weapons, ammunition, tanks and aircraft. As a result of these restrictions, Russia has relied on drones from Iran, and the US has accused North Korea of supplying them with artillery. The US operated until recently on the assumption that strong trade relations would bring countries closer together in ways that made the world safer and wealthier, a post-Cold War order. Global supply chains were supposed to reduce costs, boost profits and allow democratic values to enter the territory of oligarchies, dictatorships and autocracies. But in the wake of 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. Both the US and the European Union have provided tens of billions of dollars in incentives to stimulate more domestic production of computer chips. In a speech last month at IBM, Biden said China had lobbied specifically against a law providing $52 billion for U.S. advanced semiconductor production and development, a stimulus package that was followed by a series of announcements from Intel, Micron, Wolfspeed and others about building computer chip factories in the US. He said some of the Democratic lawmakers who opposed the measure had bought into China’s arguments. “The Chinese Communist Party has been lobbying the United States Congress against the passage of this legislation,” Biden said. “And unfortunately, some of our friends on the other team bought it.” Donald Trump has had fiery rhetoric about China during his presidency, imposing tariffs that the Biden administration has yet to lift. But by any qualitative measure, export bans on computer chips are far tougher than anything Trump is imposing, said Gregory Allen, a senior fellow in the strategic technologies program at the Center for Strategic and International Studies. Allen said the Trump-era tariffs were big in dollar terms but had almost no effect on the trade balance. Import taxes were not strategic either. Export controls imposed by the Biden administration would be a setback for Chinese technology that is already decades behind the U.S. “We’ve essentially committed to saying: China you’re not going to achieve your number one goal,” Allen said. The era of China, Russia and other competitors having relatively unfettered access to U.S. and European markets appears to be ending, said Christopher Miller, a professor at Tufts University 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 such as the Quad (Australia, India, Japan and the US) are being created and existing partnerships such as NATO are being expanded. Economic integration between these partners has become essential, as US export controls on advanced chips 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 is just one of many spaces where trade, technology and capital flows are being re-politicized by great power competition.”
