China and US Reach 'Moment of Truth' Over Chips, Analysts Say
A Look Back at the 2023 Crisis
Overt Operator
September 29, 2023
Investment analysts believe that the United States and China’s trade conflict over semiconductors, commonly called “chips” has reached a “moment of truth” over Taiwan, Investor’s Business Daily wrote on September 28.
The investment analysts note that the United States has, through its emphasis on moving semiconductor business from China to Taiwan, posed a direct challenge to China’s sovereignty, driving the stakes of the chip war and putting pressure on the upcoming Taiwan elections in 2024.
Analysts believe Taiwan’s upcoming election cycle will determine Beijing’s next move. If a candidate favoring China relations wins, there is likely to be diplomatic reprieve, but if not, analysts expect some intensifying hostility. Whatever the outcome, analysts believe that U.S. President Joe Biden’s move to protect U.S. technological security with stronger Taiwan ties has reached a period of “maximum risk,” Investor’s Business Daily wrote. This is a status that has been culminating, with investors having flagged the risks of Biden’s tech crackdown on China as early as August, Reuters reported.
Analysts ponder the status of the U.S-China chip conflict so far, with experts and well-versed journalists looking into the trajectory of the trade conflict over the past year.
In recent years, the US has implemented multiple rounds of bans on China's chip industry, with the number of mainland enterprises and individuals on the entity list surpassing 2,000, at the time of this report.
Amidst these developments, Janet Yellen, during her visit to China, had the task of convincing Chinese officials that these measures were not intended to harm China's economy. However, the true essence of the US chip blockade may have been revealed in an article titled "This is an Act of War" by Alex Palmer, a prominent China reporter for foreign media.
Palmer, a Harvard graduate and former Yenching Scholar at Peking University, has been reporting on China for a long time. In his article, he interviewed an individual who stated:
"Not only will we not allow China to make any technological progress, but we will also actively reverse their current technological level."
This reveals that the chip ban is aimed at eradicating China's entire advanced technology ecosystem.
The use of the word "eradicate" carries connotations of extermination and uprooting, often associated with diseases like smallpox or Mexican drug cartels. Its application to China's high-tech industry highlights the severity of this war. If successful, these measures could potentially impact the progress of an entire generation in China.
One significant consequence of the US embargo is the creation of a massive market demand for China's semiconductor industry. As a result, the market mechanism has become the main driving force, replacing government subsidies. Despite the challenges involved in building a domestic semiconductor industry, China is no stranger to long-term development. It is only a matter of time and speed.
However, the revolution in artificial intelligence introduces a new variable to the game, one that China must seize upon as quickly as possible. The Chinese government has responded with the final version of the Artificial Intelligence Governance and Compliance (AIGC) regulation, aiming to maximize the benefits of AI while addressing ethical and security concerns.
As the US and China continue to engage in this tech rivalry, it is essential to understand the implications of the US chip ban on China's semiconductor industry. The ban not only creates market demand but also poses a significant challenge to China's technological progress. It is a battle that goes beyond mere competition; it is an escalating war with far-reaching consequences.
The impact of the US chip ban on China's semiconductor industry cannot be underestimated. As China strives to build its domestic semiconductor industry, it also needs to capitalize on the opportunities presented by the revolution in artificial intelligence.
The rivalry between the US and China in the tech sector is not just about competition; it has become an upgraded war that will shape the future of both nations.