Don’t let geopolitics kill the world economy

  In October, the US announced a series of new restrictions on the sale of advanced technology to Chinese companies. Edward Luce, the Washington station chief of the Financial Times, said that US President Joe Biden has launched a “comprehensive economic war against China”. Luce pointed out that Biden has gone further than his predecessor Trump, because the latter only targeted individual companies such as Huawei. The shocking ambition displayed by these new measures is nothing more than preventing China’s rise as a high-tech power.
  The United States already controls some of the most critical nodes in the global semiconductor supply chain, including “throats” such as high-end chip research and design. As Gregory C. Allen, a senior fellow at the Center for Strategic and International Studies, put it, the new measures represent “unprecedented intervention by the U.S. government, not only to keep the neck stuck, but also to actively contain much of China’s technology industry.” The beginning of a new policy”.
  As Allen explained, there are several interrelated parts of the Biden strategy, targeting various levels of the supply chain. Its goals are to prevent China’s artificial intelligence industry from obtaining high-end chips; to prevent China from designing and producing artificial intelligence chips domestically by restricting access to U.S. chip design software and U.S.-made semiconductor manufacturing equipment; to prevent China from producing its own by prohibiting the supply of U.S. components Semiconductor manufacturing equipment.
  The motivation for this approach comes from the Biden administration’s view that China poses a major threat to the United States, and there is a broad consensus between the Democratic and Republican parties on this. But what exactly is threatened? Biden stated in the preface of the “National Security Strategy Report”: “The People’s Republic of China is willing and increasingly capable of reshaping the international order, so as to tilt the global competitive environment in its favor.”
  Therefore It can be clearly stated that China is a “threat” not because it undermines any fundamental security interests of the United States, but because, as it grows richer and more powerful, it seeks to impose influences. At the same time, the so-called “the United States remains committed to responsibly managing competition among our countries” actually means that the United States hopes to maintain its position unchallenged in shaping global rules in the fields of technology, network security, trade and economy.
  The Biden administration’s response is actually to vigorously strengthen the primacy of the United States, rather than to adapt to the reality of the post-unipolar world. As the new export controls demonstrate, the United States has given up on distinguishing between technology that directly helps the Chinese military and technology that is commercial (and potentially economically beneficial not only to China, but to other countries, including U.S. companies) . Those who claimed that it was impossible to separate military and commercial applications ultimately prevailed.
  The US approach has crossed the line. This one-size-fits-all approach is inherently dangerous. If the new U.S. restrictions are rightly viewed as an offensive escalation, China will find ways to retaliate, raising tensions and further deepening mutual fear.
  Every major country (in fact, all countries) will focus on their own interests, maintain national security, and take countermeasures against other countries when necessary. But as Stephen M. Walter and I have argued, a secure, prosperous, and stable world order requires fine-tuning of these responses. This means that they must be clearly linked to the damage caused by the other party’s policies and used only to mitigate the negative effects of those policies.
  Responses should not be undertaken with the express purpose of punishing or weakening the other party in the long term. And Biden’s export control of high technology is unqualified in this regard.
  The new U.S. approach to China has created other blind spots, too. The “common challenges” highlighted in the National Security Strategy Report, such as climate change and global public health, all involve important cooperation with China, but the report fails to acknowledge that waging an economic war against China undermines trust and prospects for cooperation in other areas. It also distorts the domestic economic agenda, elevating competition with China above other more worthy goals. In fact, investing in a highly capital- and skill-intensive semiconductor supply chain—a current U.S. industrial policy priority—is the most expensive way to create good jobs in the U.S. economy for those who need it most.