The growing rivalry between the two great powers of this century reached a high point in early October when the United States announced that it was prohibiting the sale of some semiconductors or tools for their manufacture to companies or citizens of the Asian giant. The measure aims to limit the advancement of Chinese capabilities in the sectors of advanced technology (supercomputers, for example) or Defense, in which Washington still retains some advantage.
Although expected to some extent, the restrictions fell like a bucket of cold water in China. The corrective "seriously violates trade agreements and damages Beijing's legitimate interests," criticized its Foreign Minister, Wang Yi, who also asked Washington to "stop creating new obstacles."
Putting sticks in the wheels of Chinese technological development comes from afar. There are the setbacks caused by President Donald Trump to the technology companies ZTE or Huawei, which were denied access to their chips and forced to develop their own operating system. Already with Joe Biden in the White House, Congress approved the Chips law, which contemplates 52,000 million in aid for the national semiconductor industry (except for those that collaborate with China), and prohibited firms such as Nvidia and AMD from selling their chips. of next-generation artificial intelligence to Chinese companies.
In the short term, the restrictions threaten to slow China's technological progress, with ramifications for its social and economic development. It is likely that Beijing will try to find alternative suppliers or some way to circumvent the restrictions, for which the behavior of third countries with significant weight in this highly specialized sector will be key.
The United States must ensure that its allies "row in the same direction," wrote Gregory Allen of the Center for Strategic and International Studies. “Turning those unilateral export controls into multilateral ones will be a major challenge and one of the key diplomatic priorities for the White House in its talks with Europe, Japan, Taiwan and South Korea,” he added.
More in the medium and long term, China will redouble its efforts to develop its own semiconductor industry, something on which it has been working intensely in recent years. This was highlighted in the speech that President Xi Jinping offered during the recent congress of the Chinese Communist Party, in which he advocated achieving "greater self-sufficiency" in science and technology, a prelude to large investments in the sector. China currently consumes about three-quarters of the semiconductors sold globally, but only produces about 15% of the total.
"Technological decoupling could serve China as a Sputnik moment for innovation, forcing it to take a top-down, self-sufficient approach, especially in semiconductors," Citi said in a note. However, it will not be easy. Experts point out that Chinese manufacturers are several years behind their overseas counterparts, making them unsuitable as instant replacements for lost equipment from American suppliers. They point out that semiconductor innovation is based on cutting-edge knowledge in a global supply chain that the country will find difficult to recreate and faces multiple top-tier competitors with decades of experience.
For their part, US companies could also be harmed by the new set of restrictions. China is the largest customer of American semiconductors, and exports to the Asian giant represent up to 60% of the income of some companies such as Qualcomm or Intel. In August, Nvidia said its quarterly revenue could fall as much as $400 million after it was banned from selling high-end chips to China. The measure could also affect US manufacturers with factories in China that depend on these semiconductors for their products, such as Tesla or Apple, among others.
