The Biden administration is waging an all-out economic war against China, aimed not only at curbing trade, but preventing China from making progress and competing with the United States in key high-tech areas.
Last month, Biden took the unprecedented step of banning the sale of state-of-the-art semiconductors and the equipment needed to make them to China. U.S. citizens are also barred from working for Chinese computer chip makers.
While the U.S. enforces the ban in the name of “defense,” semiconductors are not only critical to military applications, but are essential to nearly every aspect of modern society, from electronics and transportation to the design and production of a wide variety of goods.
China is the world’s largest manufacturer, and its reliance on semiconductors is highlighted by the fact that it spends more on imported computer chips than on oil and gas. In 2021, China imported a record $414 billion in computer chips, accounting for more than 16% of its total imports.
While the U.S. ban does not apply to all semiconductor sales to China, the ban applies to the latest generation of computer chips that are vital to technological fields such as artificial intelligence, supercomputing and automation. Washington has deliberately sabotaged China’s ambitious “Made in China 2025” plan to rapidly become a global leader in a range of high-tech industries including artificial intelligence, 5G wireless and quantum computing.
Biden’s escalating economic war against Beijing is part of the U.S. preparations for a military conflict with China. Despite the reckless U.S. and its NATO allies waging war against Russia in Ukraine, the recently released U.S. National Security Strategy identifies China as “the only competitor with the intent and ability to reshape the international order.”
The dangers of Biden’s China semiconductor ban are all but hidden from the American and international working classes. In the economic and strategic realms, however, its enormous impact is evident. October 19 Financial Times An article by Edward Luce titled “Containment of China is a clear Biden goal” sounded the following wake-up call: “Imagine a superpower declaring war on a great power and no one notices. Joe Biden this month launched an all-out economic war against China — all but halted the U.S.’s rise — and for the most part, Americans didn’t respond.
“To be sure, Russia’s war on Ukraine and domestic inflation have raised eyebrows. But history will likely record Biden’s move as a moment when the U.S.-China rivalry comes out.”
Also, last week, a senior Biden administration official said the U.S. was preparing to impose new bans on China in key high-tech sectors. Speaking at the Center for a New American Security, Alan Estevez, undersecretary for industry and security at the Commerce Department, was asked whether the United States would ban China from accessing quantum information science, biotechnology, artificial intelligence software or advanced algorithms. Estevez admits that this is already under active discussion. “Are we going to end up doing something in these areas? If I were a gambler, I would put money into it,” he said.
The impact of Biden’s actions not only on China, but also on U.S. companies and the global economy has yet to be seen. However, just as the U.S. war with NATO against Russia has severely disrupted global supply chains and is a major factor in the rapid rise in inflation, a U.S. semiconductor ban on China is likely to be disruptive, and in fact even more so.
Dutch semiconductor equipment supplier ASM International (ASMI) said last week it expected the U.S. ban to hit more than 40 percent of its sales to China, CNN reported. In the first nine months of this year, China accounted for 16% of its total equipment sales.
U.S.-based Lam Research, which also sells semiconductor equipment and services, forecasts it could lose $2 billion to $2.5 billion in annual revenue in 2023 due to the U.S. export ban.
Semiconductor design and manufacturing is an integral part of global production and is itself a deeply integrated global industry. Most of the chip design and chip fabrication equipment production takes place in the United States and three East Asian countries – Japan, South Korea and Taiwan. But the actual fabrication of semiconductors takes place overwhelmingly in East Asia.
When it comes to state-of-the-art chips, ASMI is the sole manufacturer of necessary equipment, with TSMC producing 91% of the world’s supply, while Samsung and Intel are underperforming.
TSMC’s dominance in global chipmaking underscores the recklessness of the growing confrontation between the United States and China. While accusing China of preparing to invade Taiwan, the Biden administration deliberately provokes Beijing, strengthens ties with Taipei and undermines the one-China policy, under which the United States de facto recognizes Beijing as the legitimate government of all of China, including Taiwan.
While instigating Chinese military action, Washington is arming Taiwan to the teeth, turning Taiwan into a quagmire for the Chinese military.
The Biden administration is acutely aware that any war against Taiwan would have catastrophic effects on the global semiconductor supply chain. It is forcing TSMC to move most of its manufacturing to the United States. While TSMC has begun building a factory in Arizona, it has refused to relocate its main manufacturing facility and is building a huge new factory in Taiwan.
In a clear sign that the U.S. is preparing for war with China, the Biden administration is pushing to build a national chip-making capability through legislation called the Chip and Science Act, which would be available to U.S. semiconductor makers within five years. Allocate $280 billion. Conductor industry and scientific research.
The capital needed to build a self-sufficient U.S. industry is likely to be far greater. A report last year by the Semiconductor Industry Association and the Boston Consulting Group titled “Strengthening Global Semiconductor Supply Chains in Times of Uncertainty” noted that all countries depend on an integrated global supply chain, and that semiconductors are the fourth largest in the world. . The most traded product after crude oil, refined oil products and automobiles.
The report estimates the upfront cost of building a “self-sufficient” local supply chain in the U.S. to meet demand in 2019 at between $35 billion and $420 billion, followed by substantial ongoing costs.as described in s Financial Times Edlyn Levine, chief scientific officer of the Frontiers Fund, declared that it was “an illusion” that the United States could completely decouple from TSMC. “The idea … is not technically feasible,” he said.
However, as it prepares to go to war with China, the United States is being forced to invest heavily in an attempt to build a national industry vital to the military and impose new economic burdens on the working class. U.S. imperialism, already at war with a nuclear-armed state, is desperate to pursue a strategy of diplomatic, economic and military confrontation with a nuclear-armed China in order to consolidate its global dominance, which could lead to a catastrophic global conflict.
Luce ended his Financial Times The article quoted above declares: “Will Biden’s gamble work? I don’t like the prospect of discovery. For better or worse, the world just changes with a whimper rather than a bang. Let’s hope it stays that way. .”
In fact, Biden’s semiconductor ban is another giant step in the US’ accelerated preparations for a war if the international working class doesn’t end. This is the significance of the movement of the International Committee of the Fourth International to unite international workers with a socialist perspective to do this.