Soon after Trump was elected as president, the trade war between China and the U.S. began. On February 24th, 2022, Russia invaded Ukraine. A few months later, Pelosi’s plane landed in Taiwan. Ukraine is safe; with the support the U.S. and other countries are providing, the brave nation is holding its ground. It is hard to trace the start of the rivalry between China and the U.S. Perhaps it originated from the deathbed of Soviet Russia; perhaps it grew in the protests in Hongkong; perhaps it crept from the suspicion of Xinjiang; perhaps it amplified when the trade war started… Regardless, the tension between the U.S. and China did not seem to ease even after Trump ended his presidency, rather, it seemed to have grown. Many see Taiwan as second to Ukraine, and China as second to Russia.
To add to the series of events, on October 7th, a sanction on the exportation of advanced chips and computing tools to China was imposed by the U.S. Chinese officials and companies are no strangers to sanctions. For example, during the trade war around 2018, the U.S. imposed tariffs on multiple products, and the Chinese government did the same in retaliation. However, the recent sanction was different in broadness and extent.
The sanction passed is comprehensive, aimed at the product of computing technology, and intended to halt the development of the high-end semiconductor industry in China. The Biden administration has exhibited an interest in slowing and potentially halting Chinese science and technological development due to security concerns, specifically “advanced logic and memory chips.” Since technology as well as weaponry are increasingly automated, the importance of computing power increases each day. Another concern lies in the field of artificial intelligence (AI). With the completion of major AI projects on image and language recognition in China, alarms were raised on the potential impact of these AI if the U.S. does enter a conflict with China. Being more advanced in technology would indeed benefit the U.S. greatly in face of a potential conflict with China. The sanction would prevent all exportation of advanced chips and computation tools from being exported, effectively halting the Chinese development of AI, phones, and advanced weaponry.
The extent of the sanction is also significant, as it cuts off all supply of advanced computing technology for China, halting the AI and computing industry. Furthermore, due to the nature of the sanction, the high officials of the technology companies in China have to give up their U.S. citizen or green card status in order to keep their job. The sanction clearly bans all U.S. citizens or green-card holders from selling or leaking information about related technologies. This not only ensures that domestic U.S. companies would refrain from exporting chips to China but forces some top officials of the Chinese tech companies to pick sides. Those blacklisted top officials of tech companies in China who holds US green card or citizenship would have to either leave their posts or give up the green card or citizenship.
The immediate impact of the sanction is manifested by the stock market; 13 sanctioned firms had their market value drop more than 10% since October 10th, while five had a more than 20% decline. The relationship between China and the U.S. also worsens due to the distrust implied in the sanction, showing the U.S as being unwilling to allow research on supercomputing and AI conducted in China. Despite the potential merit within the suspicion toward Chinese tech companies, the act of sanctioning harms the relationship between the two countries due to the likely Chinese countermeasures. The possible long-term impacts are foreseeable as well. China will likely increase its spending on chip research and development. The U.S. and its allies will be impacted minimally due to the sanction being targeted at one specific nation. The lack of computing technology may also result in an increase in tension between China and Taiwan, due to the advanced technology production companies possessed by Taiwan.
The relationship between the two countries would not only affect Taiwan but also trade in general. The increasing disassociation of Chinese tech companies with US chips would influence the entire Chinese economy, which in turn would impact the world. This sanction would add to the Trade War of 2018 and the Covid policy maintained by the Chinese government, potentially further dissociating China from the US and the world.
