This week has been a busy week for U.S.-China trade policy, particularly in the critical area of semiconductors and the materials that go into chips that are essential to many cutting-edge technologies, including the latest in AI.
This week’s moves by both the United States and China mark the beginning of an escalating dispute over who controls the world’s most powerful chips.
The Biden administration has worked in recent years to limit the further development of China’s semiconductor industry. On Monday, the US further stepped up its crackdown.
“President Biden is seeking to tighten high-tech chip regulations on China, essentially limiting China’s access and ability to manufacture high-end AI chips that could serve a variety of security interests.” said Cory Combs, associate director of experts Trivium China. Economic research company.
The administration has expanded the list of companies blocked from accepting exports of certain chip technologies. The list includes not only companies in China but also Chinese-owned companies in other countries.
“So in retaliation, China is further cracking down on certain mineral products that are essential to these industries, essentially showing that the United States has leverage in this engagement as well,” Combs said. .
In addition, China is escalating its messaging wars, said Jacob Feldgois, a data research analyst at Georgetown’s Center for Security and Emerging Technologies.
China’s top industry group warned that “US chips cannot be trusted in efforts that appear to encourage Chinese companies to buy domestically produced Chinese chips.”
For now, this interaction is primarily just creating headaches for those managing the chip supply chain. But the effects of this trade war could be widespread, said Martin Chorzempa, a senior fellow at the Peterson Institute for International Economics.
“Our military may have a hard time getting some of the parts we take for granted because they can be purchased from China at a lower cost,” he said.
And it could also hurt consumers. “As tensions between the U.S. and China increase, costs may increase,” Chozempa said. “And companies are going to have to replicate their supply chains and build alternative supply networks, so they’re going to avoid either the U.S. or China. And it all costs money.”
And it is certain that this controversy will continue into the next administration.
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