The United States has restricted exports of critical semiconductor components and technology to China, Beijing’s bid to topple Washington as the No 1 economy faces ‘unprecedented’ pressure, according to The Star reports.
Despite having the world’s strongest industrial manufacturing capability, core technologies like China’s Achilles’ heel are easy prey for Washington in its strategy of tech containment.
Chinese President Xi Jinping’s hopes of transforming China into the pre-eminent global digital power, while surpassing the US to become the number one economy in the world, could fall apart, The Star reported as quoted by ANI.
Jun Zhang, an associate professor of economic geography at the University of Toronto said, “Chips are the foundation of the modern economy. There’s a rough estimate that a yuan worth of chips can support 10 yuan worth of electrical capacity and generate 100 yuan’s economic output.”
The professor also said that China faces unprecedented pressure from the US and its international competitiveness depends to some extent on how far American containment will go.
“These sanctions will hobble China’s semiconductor advances,” said Dan Wang, an analyst with Gavekal Dragonomics.
Meanwhile, US President Joe Biden signed into law the bipartisan Chips and Science Act of 2022 last August to bolster American semiconductor development through federal subsidies worth USD 52.7 billion.
His administration then significantly expanded its list of technological controls on China in October, with a focus on advanced semiconductor chips, chip-making software, and tech talent, reported The Star.
The containment efforts were accelerated last month when the US joined hands with the Netherlands and Japan to limit the supply of cutting-edge chipmaking equipment to China.
Further complicating the situation, the European Union (EU) is expected to pass the EU Chips Act later this year. The legislation hopes to double Europe’s share of global chip manufacturing capacity to roughly 20 percent.
Beijing has made no official estimate for potential economic losses, but it has criticized Washington for misusing its market dominance.
Source : LiveMint
