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New York Times Magazine Documents U.S. Economic ‘Act of War’ on China

July 16, 2023, 2022 (EIRNS)—Under the title: “ ‘An Act of War’: Inside America’s Silicon Blockade Against China” in the New York Times Magazine, details the content of the Oct. 7, 2022 export controls, that “the United States government announced its intent to cripple China’s ability to produce, or even purchase, the highest-end chips.” This Chip War, they admit, “taking aim at a target far broader than the Chinese security state.”

They quote Gregory Allen from CSIS: “The key here is to understand that the U.S. wanted to impact China’s AI industry. The semiconductor stuff is the means to that end.” The Times adds: “Though delivered in the unassuming form of updated export rules, the Oct. 7 controls essentially seek to eradicate, root and branch, China’s entire ecosystem of advanced technology.” Again quoting Allen: “The new policy embodied in Oct. 7 is: Not only are we not going to allow China to progress any further technologically, we are going to actively reverse their current state of the art.”

The Times goes on:

“If the controls are successful, they could handicap China for a generation; if they fail, they may backfire spectacularly, hastening the very future the United States is trying desperately to avoid. The outcome will likely shape U.S.-China competition, and the future of the global order, for decades to come.

“ ‘We said there are key tech areas that China should not advance in,’ says Emily Kilcrease, a senior fellow at the Center for a New American Security and a former U.S. trade official. ‘And those happen to be the areas that will power future economic growth and development.’ ”

Three firms, all located in the U.S., dominate the market for chip-design software, which is used to arrange the billions of transistors that fit on a new chip. The market for advanced chip-manufacturing tools is similarly concentrated, with a handful of companies able to claim effective monopolies over essential machines or processes—and nearly all of these companies are American or dependent on American components. At every step, the supply chain runs through the U.S., U.S. treaty allies or Taiwan, all of them operating in a U.S.-dominated ecosystem.

They point to the May 2020 Trump attack on Huawei as the beginning of this war,

“making Huawei subject to a formerly obscure provision of export-control law called the foreign direct product rule. Under the FDPR, foreign-made items are subject to American controls if they were produced using American technology or software. It is a sweeping assertion of extraterritorial power: Even if an item is made and shipped outside the United States, never once crossing the country’s borders, and contains no U.S.-origin components or technology in the final product, it can still be considered an American good....

“After Oct. 7, U.S. persons are no longer allowed to engage in any activity that supports the production of advanced semiconductors in China, whether by maintaining or repairing equipment in a Chinese fab, offering advice or even authorizing deliveries to a Chinese semiconductor manufacturer.”

In late January, the Biden administration reached an agreement with Japan and the Netherlands, under which they would implement similar controls on semiconductors or semiconductor-manufacturing equipment, an agreement that Taiwan, the other major chip producer with Japan and the Netherlands, had already accepted.

The Times admits that China is now forced to massively advance their domestic capacities, which is what they are, in fact, doing.

“Should a large share of China’s $400 billion in annual chip imports be turned inward, domestic chip companies may finally have the means and motivation to catch up.... Huawei remains one of the world’s biggest spenders on research and development, with a budget of about $24 billion last year and a research team of over 100,000 employees.”

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