Last Week's Biggest News That Didn't Make The Headlines

Remember How Trump Started A Trade War With China? Biden's Going To Finish It

Let me see if I got this right— Biden told American semi-conductor engineers working in China, either quit your job or lose your citizenship, which seems pretty gutsy and pretty unconstitutional. The Indian tech industry sure seems very excited. “Under the latest US technology export rules, US citizens working in Chinese firms might face a tough choice— quit their jobs or risk losing US citizenship. The latest tech export rules by the Joe Biden administration are an attempt to further regulate the flow of technological know-how from the United States to China and to affect the Chinese ability to produce semiconductors — commonly called chips— which are the bedrock of modern electronic industry and are used in everything from our personal computers to electric vehicles and high-end military technology. Coupled with increased funding for domestic chip production, Biden's latest tech export rules are an attempt to wean the United States and the world off Chinese techonology and target its manufacturing base.”

Aside from a ban on exporting AI chips and high-performance computing and gear for chip production to China, the rules also “effectively prohibit US persons from ‘supporting’ the development or manufacture of chips covered by the restrictions. It is this rule that puts US nationals in Chinese chip-related companies in a difficult spot.

Under latest tech export control rules, American citizens are permanent citizens are barred from supporting the development and production of advanced chips at Chinese factories, according to Fortune, which adds that such a norm was earlier only applicable on companies.

The effect of this rule is already being felt as companies have started taking Americans off chip development and production.

The South China Morning Post (SCMP) reported that there are dozens of chief-level executives that are covered under this rule.

"Most of these executives are naturalised citizens who were born in China and studied at American universities or worked in the US chip industry," reported SCMP. It further reported that top Chinese chip company Naura Technology Group has asked its American executives to stop working on chip research and development (R&D).

Jon Bateman for Foreign Policy: ”Biden Is Now All-In on Taking Out China— committed to rapid decoupling, whatever the consequences. The United States has waged low-grade economic warfare against China for at least four years now— firing volley after volley of tariffs, export controls, investment blocks, visa limits, and much more. But Washington’s endgame for this conflict has always been hazy. Does it seek to compel specific changes in Beijing’s behavior, or challenge the Chinese system itself? To protect core security interests, or retain hegemony by any means? To strengthen America, or hobble its chief rival? Donald Trump’s scattershot regulation and erratic public statements offered little clarity to allies, adversaries, and companies around the world. Joe Biden’s actions have been more systematic, but long-term U.S. goals have remained hidden beneath bureaucratic opacity and cautious platitudes.”

The NY Times reported late last week that the U.S. has been trying to figure out how to deal with China’s use of “supercomputing and artificial intelligence to develop stealth and hypersonic weapons systems, and to try to crack the U.S. government’s most encrypted messaging.” The answer was for the White House to “use U.S. influence over global technology and supply chains to try to choke off China’s access to advanced chips and chip production tools needed to power those abilities. The goal was to keep Chinese entities that contributed to potential threats far behind their competitors in the United States and in allied nations.

Gregory Allen, a former Defense Department official who is now at the Center for Strategic and International Studies, said the move came after consultation with allies but was “fundamentally unilateral.”

“In weaponizing its dominant choke-point positions in the global semiconductor value chain, the United States is exercising technological and geopolitical power on an incredible scale,” he wrote in an analysis.

The package of restrictions allows the administration to cut off China from certain advanced chips made by American and foreign companies that use U.S. technology.

U.S. officials described the decision to push ahead with export controls as a show of leadership. They said some allies wanted to impose similar measures but feared retaliation from China, so the rules from Washington that encompass foreign companies did the hard work for them.

Other rules bar American companies from selling Chinese firms equipment or components needed to manufacture advanced chips, and prohibit Americans and U.S. companies from giving software updates and other services to China’s cutting-edge chip factories.

The measures do not directly restrict foreign makers of semiconductor equipment from selling products to China. But experts said the absence of the American equipment would most likely impede China’s nascent industry for making advanced chips. Eventually, though, that leverage could fade as China develops its own key production technologies.

…Last week… companies immediately began halting shipments to China. But U.S. officials said they would issue licenses on a case-by-case basis so some non-Chinese companies could continue supplying their Chinese facilities with support and components. Intel, TSMC, Samsung and SK Hynix said they had received temporary exemptions to the rules.

The controls could be the beginning of a broad assault by the U.S. government, Pottinger said.

“The Biden administration understands now that it isn’t enough for America to run faster— we also need to actively hamper the P.R.C.’s ambitions for tech dominance,” he said, referring to the People’s Republic of China. “This marks a serious evolution in the administration’s thinking.”