China-US rivalry: ‘The US objective is to stem Chinese technological progress in all key sectors’ |  IFRI

China-US rivalry: ‘The US objective is to stem Chinese technological progress in all key sectors’ | IFRI

As the Chinese Communist Party completed preparations for its 20th Congress, the United States announced on October 7 new technological restrictions against China, which went relatively unnoticed in Europe. However, they mark a major turning point in the Sino-American rivalry, which will not be without consequences for the Europeans.

These new controls severely restrict the export to China of high-end semiconductors and the equipment and software needed to manufacture them. Washington is thus depriving China of essential elements for the development of future technologies, particularly artificial intelligence and supercomputers. After the various sanctions handed down by the American authorities since the Trump years, these measures may seem to be just the umpteenth step in a list destined to grow. In reality, they represent a real break with the doctrine of the United States for more than twenty years, by the technologies they target but also by their very nature.

US export controls on China now target civilian tech

The regulations released this month by the Department of Commerce demonstrate a double rupture. First, they target one country in particular, China, where export control regimes since the end of the Cold War have tended to target more weapons-related technologies (especially those of mass destruction). Hence the second break: they target mainly commercial technologies. These measures materialize the change of direction announced on September 16 by Jake Sullivan, national security adviser to Joe Biden: the American objective is no longer as before to maintain a technological gap of two generations with China, but to maintain “as wide a lead as possible”… and therefore to stem Chinese technological progress in key sectors.

With these restrictions, the United States assumes its intention to curb the development of “indigenous” Chinese production capacities. While Washington emphasizes that these targeted measures do not represent a generalized “decoupling” program, they mark the American desire to freeze Chinese capabilities in semiconductors, in order to preserve American technological leadership, a real national security imperative.

What rightly worries Americans is the “multiplier effect” of advanced technologies – advanced semiconductors, supercomputers, quantum, artificial intelligence… – and the Chinese strategy of civil-military fusion. For Washington, China’s pursuit of a dominant position in these key economic sectors can no longer be separated from the strategic and military threats posed by Beijing. Hence the drastic measures to block China’s access not only to technologies related to advanced semiconductors (whose etching fineness is less than 14 nm) and their manufacture, but also to people – in the broad sense – who can contribute to the progress of Chinese companies in this sector. The recent restrictions thus prevent any United States citizen, green card holder, or American company from supporting the development or production of advanced chips in China.

Serious consequences for China and beyond

The US measures will have very serious consequences for Chinese manufacturers of high-end chips, and will push China to redouble its efforts in its quest for technological self-sufficiency. But the repercussions will be felt far beyond China. Indeed, recent U.S. announcements broadly expand an extraterritorial measure employed against Huawei in 2020, which stipulates that these restrictions also apply to non-U.S. goods if they were made using U.S. technology. This allows Washington to restrict certain exports from foreign companies – including European ones – to China. Trading with China in this cutting-edge sector in the globalized value chain (United States, Taiwan, Japan, South Korea, the Netherlands, etc.) now requires obtaining a license from the American Department of Commerce.

Committed to the smooth running of its 20th Congress, China reacted little, deploring the American “technological hegemony”. During the opening of the Congress on October 16, Xi Jinping insisted on the need to “resolutely win key technological battles”.

If the Chinese response is still awaited, Beijing has already developed in recent years its legislative and regulatory arsenal of economic retaliation. Inspired by US sanctions, it gives Chinese authorities tools to punish those who “unfairly” apply foreign extraterritorial measures, and equips China with legislation with its own extraterritorial reach. This system is likely to evolve in the face of the tightening of American measures. Anxious not to enter into a direct confrontation with the first world power, Beijing could seek to direct its efforts towards the allies of the United States, in an effort to divide the Western camp and exert indirect pressure on Washington…

Will Europe follow the United States?

The unilateral adoption and extraterritorial application of these measures undermines the credibility of the Biden administration’s rhetoric on the importance of multilateralism, and has sparked protests from European and Asian allies. But even in Europe, the need for a firmer approach vis-à-vis China is gaining more and more consensus. Meeting on Monday 17 October in Brussels, the Foreign Ministers of the 27 EU countries affirmed their position: if China remains an important partner in certain areas, it is increasingly an economic competitor – now even qualified as “tough” – and a systemic rival.

Today, the era when economic interdependence was seen as a stabilizing force in international relations and a guarantor of peace between nations seems well and truly over. Caught in the vice of extraterritoriality, European companies are seeing their room for maneuver shrink, while the blocking of multilateral bodies is fueling the American temptation of unilateralism. Faced with the coercive practices of the great powers and the risk of escalation, Europe must give itself the means to take the difficult decisions that are necessary, on its terms.

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