Computer chip ban signals new era as Biden and Xi meet

Nov 11, 2022, 10:09 PM | Updated: Nov 13, 2022, 11:07 pm
FILE - President Joe Biden attends an event to support legislation that would encourage domestic ma...

FILE - President Joe Biden attends an event to support legislation that would encourage domestic manufacturing and strengthen supply chains for computer chips in the South Court Auditorium on the White House campus, March 9, 2022, in Washington. The Biden administration's recent move to block exports of advanced computer chips to China signals a new phase in relations between the globe's two largest economies. (AP Photo/Patrick Semansky, File)

(AP Photo/Patrick Semansky, File)

WASHINGTON (AP) — The Biden administration’s move to block exports of advanced computer chips to China is signaling a new phase in relations between the globe’s two largest economies — one in which trade matters less than an increasingly heated competition to be the world’s leading technological and military power.

The aggressive move, announced last month, will help set the tone for President Joe Biden’s upcoming meeting with Chinese President Xi Jinping on Monday on the sidelines of the Group of 20 summit in Asia. It’s evidence of Biden’s determination to “manage” the U.S. competition with China, whose officials were quick to condemn the export ban.

After more than two decades in which the focus was on expansion of trade and global growth, both countries are openly prioritizing their national interests as the world economy struggles with high inflation and the risk of recessions. The U.S. and China have each identified the development and production of computer chips as vital for economic growth and their own security interests.

“We’re going to do whatever it takes to protect Americans from the threat of China,” Commerce Secretary Gina Raimondo said in an interview. “China is crystal clear. They will use this technology for surveillance. They will use this technology for cyber attacks. They will use this technology to, in any number of ways, harm us and our allies, or our ability to protect ourselves.”

Xi responded to the export ban in his statement at last month’s congress of the Chinese Communist Party, where he secured a third term as the country’s leader. He pledged that China would move more aggressively to become self-reliant in producing semiconductors and other technologies.

“In order to enhance China’s innovation capacity, we will move faster to launch a number of major national projects that are of strategic, big-picture and long-term importance,” Xi said.

The Chinese government has named the development of advanced computer chips that could handle everything from artificial intelligence to hypersonic missiles as one of its top priorities. To bridge the gap until it can get there, China has been relying on imports of advanced chips and manufacturing equipment from the U.S., which imposed a series of export controls last month that block sending to China the world’s most advanced chips, factory equipment and industry experts tied to America.

The U.S. and its allies famously deployed export controls against Russia after the February invasion of Ukraine, making it harder for Russian forces to be resupplied with weapons, ammunition, tanks and aircraft. As a result of those constraints, Russia has relied on drones from Iran and the U.S. has accused North Korea of supplying them with artillery.

The U.S. had until recently operated from the premise that strong trade relationships would bring countries closer together in ways that made the world safer and wealthier, a post-Cold War order. Global supply chains were supposed to lower costs, boost profits and enable democratic values to seep into the terrain of oligarchies, dictatorships and autocracies.

But after a global pandemic, the war in Ukraine and China’s own ambitions, the Biden administration and many European and Asian allies have chosen to prioritize national security and industrial strategies. Both the U.S. and European Union have provided tens of billions of dollars in incentives to spur more domestic production of computer chips.

In a speech last month at IBM, Biden said China specifically lobbied against a law that provides $52 billion to produce and develop advanced semiconductors in the U.S., an incentive package that has been followed by a string of announcements by Intel, Micron, Wolfspeed and others about the construction of computer chip plants in the U.S..

He said that some of the GOP lawmakers who opposed the measure had bought into the arguments made by China.

“The Communist Party of China was lobbying in the United States Congress against passing this legislation,” Biden said. “And unfortunately, some of our friends on the other team bought it.”

Donald Trump had fiery rhetoric on China during his presidency, imposing tariffs that the Biden administration has yet to lift. But by any qualitative measure, the export bans on computer chips are much tougher than anything imposed by Trump, said Gregory Allen, a senior fellow in the strategic technologies program at the Center for Strategic and International Studies.

Allen said the Trump-era tariffs were large in terms of dollars, but they had almost no affect on the balance of trade. Nor were the import taxes strategic. The export controls imposed by the Biden administration would be a setback for Chinese technology that is already decades behind the U.S.

“We have essentially committed ourselves to saying: China you will not achieve your number one goal,” Allen said.

The era of China, Russia and other competitors having relatively unfettered access to U.S. and European markets appears to be ending, said Christopher Miller, a Tufts University professor and author of the book, “Chip Wars.”

“The risks posed by these countries has grown, so Western leaders have reconsidered the wisdom of giving adversaries open access to their markets,” Miller said.

Instead of trying to work together as a single global economy, new alliances are being formed such as the Quad (Australia, India, Japan and the U.S.) and existing partnerships such as NATO are being expanded. Economic integration among these partners has become essential, as the U.S. export controls on advanced chips need support from other producers in Japan and the Netherlands.

“All the great powers are restructuring international economic relations in ways they hope will improve their geopolitical position,” Miller said. “Semiconductors are just one of many arenas in which trade, tech, and capital flows are being re-politicized due to great power rivalry.”

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

FILE - People visit Magic Kingdom Park at Walt Disney World Resort in Lake Buena Vista, Florida, on...
Associated Press

Disney World unions vote down offer covering 45,000 workers

ORLANDO, Fla. (AP) — Union members voted down a contract proposal covering tens of thousands of Walt Disney World service workers, saying it didn’t go far enough toward helping employees face cost-of-living hikes in housing and other expenses in central Florida. The unions said that 13,650 out of 14,263 members who voted on the contract […]
9 hours ago
Jessica Day-Weaver holds a ceramic hand print of her daughter, Anastasia, at her home, Thursday, Fe...
Associated Press

‘Died suddenly’ posts twist tragedies to push vaccine lies

Results from 6-year-old Anastasia Weaver’s autopsy may take weeks. But online anti-vaccine activists needed only hours after her funeral this week to baselessly blame the COVID-19 vaccine. A prolific Twitter account posted Anastasia’s name and smiling dance portrait in a tweet with a syringe emoji. A Facebook user messaged her mother, Jessica Day-Weaver, to call […]
9 hours ago
FILE - This Dec. 21, 2022, image provided by Eisai in January 2023 shows vials and packaging for th...
Associated Press

Why a new Alzheimer’s drug is having a slow US debut

The first drug to show that it slows Alzheimer’s is on sale, but treatment for most patients is still several months away. Two big factors behind the slow debut, experts say, are scant insurance coverage and a long setup time needed by many health systems. Patients who surmount those challenges will step to the head […]
9 hours ago
FILE - President Joe Biden speaks on the January jobs report in the Eisenhower Executive Office Bui...
Associated Press

State of the Union: Biden sees economic glow, GOP sees gloom

WASHINGTON (AP) — Going into Tuesday’s State of the Union address, President Joe Biden sees a nation with its future aglow. Republicans take a far bleaker view — that the country is beset by crushing debt and that Biden is largely responsible for inflation. And the GOP now holds a House majority intent on blocking […]
9 hours ago
Sri Lankan government soldiers march carrying national flags during the 75th Independence Day cerem...
Associated Press

Sri Lanka marks independence anniversary amid economic woes

COLOMBO, Sri Lanka (AP) — Sri Lanka marked its 75th independence anniversary on Saturday as a bankrupt nation, with many citizens angry, anxious and in no mood to celebrate. President Ranil Wickremesinghe, who has started to improve some but not all of the acute shortages, acknowledged the somber state of the nation, saying in a […]
1 day ago
FILE - President Joe Biden delivers his first State of the Union address to a joint session of Cong...
Associated Press

Biden makes progress on ‘unity agenda’ outlined in 2022

WASHINGTON (AP) — A year ago, President Joe Biden used his first State of the Union address to push top Democratic priorities that were sure to face a battle in the narrowly divided Congress but he also laid out a four-pronged “unity agenda” that would be an easier sell. Biden’s unity goals would be hard […]
1 day ago

Sponsored Articles

...
Fiesta Bowl Foundation

Celebrate 50 years of Vrbo Fiesta Bowl Parade magic!

Since its first production in the early 1970s, the Vrbo Fiesta Bowl Parade presented by Lerner & Rowe has been a staple of Valley traditions, bringing family fun and excitement to downtown Phoenix.
(Photo via MLB's Arizona Fall League / Twitter)...
Arizona Fall League

Top prospects to watch at this year’s Arizona Fall League

One of the most exciting elements of the MLB offseason is the Arizona Fall League, which began its 30th season Monday.
...
Quantum Fiber

Stream 4K and more with powerful, high-speed fiber internet

Picking which streaming services to subscribe to are difficult choices, and there is no room for internet that cannot handle increased demands.
Computer chip ban signals new era as Biden and Xi meet