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US and China

Biden’s “economic war” on Beijing

Technicians perform production control tasks at the implant zone in the cleanroom at Fab7 in the Globalfoundries Inc. semiconductor fabrication (fab) facility in Singapore, on Tuesday, May 18, 2021. At a White House meeting in April, President Joe Biden told company executives that he had bipartisan backing for his proposal to spend $50 billion to support semiconductor manufacturing and research. Photographer: Lauryn Ishak/Bloomberg via Getty Images

It’s astonishing how little coverage it has received, says Edward Luce in the FT, but Joe Biden has just launched a “full-blown economic war” on Beijing. Specifically, his administration has announced severe restrictions on the export of high-end US semiconductor chips to China; similar limits on chips made with US equipment (which means pretty much all of them); and a ban on Americans and green card holders working with Chinese chip producers without approval. The move won’t just affect China’s military and AI capabilities, which rely on advanced computer chips. It means America is committed “to blocking China in all kinds of civilian technologies that make up a modern economy”.

Washington, which for decades assumed that “China’s global integration would tame its rise as a great power”, now seems close to making “regime change” in Beijing its implicit goal. This approach is bipartisan: there are no prominent Democrats or Republicans opposing “US-China decoupling”. But adopting such a tough approach on semiconductors is risky. It could prompt Chinese President Xi Jinping to accelerate his plans to take control of Taiwan – the island nation is by far the world’s biggest producer of high-end chips. What’s clear is that Washington has now endorsed “a zero-sum metric in which China’s rise is seen as being at America’s expense”. For better or worse, “the world has just changed”.